Reverse Mortgages in uncertain economic times

Recently I have been hearing from a number of seniors that they want to take the "wait and see approach" to thier financial future and decide later if they want the education on the Reverse Mortgage. In uncertain economic times waiting to learn about the Reverse Mortgage is possibly the WORST thing to do. Consider this - as we listen to the news and do a little research on the economic climate my feeling is that things are going to get worse before the get better. At least they aren't going to get better for some time, but it will get better - we just don't know when. So why wouldn't you take the time to look at the Reverse Mortgage program. There are a lot of companies that will send you free information, will answer your questions over the phone and will even meet face to face with you and your family.

Here are the reasons taking the wait and see approach is possibly the WORST thing to do in regards to learning about the Reverse Mortgage:

Currently the interest rates are at an all-time low (which means more cash to you).


Currently the cash from a Reverse Mortgage is Tax-Free.

Currently no income qualifications are required.

Currently there are banks that will fund Reverse Mortgages.

The Reverse Mortgage gives you control over your cash – when you leave the cash in your house, the bank has control over it and when the government has a stake in the major banks…then what??

Now is the time to explore your options!



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Reverse Mortgage Lending Limit

If you have been following and looking into the Reverse Mortgage, you already know that the lending limit has increased. Here is a quick synopsis of what that means:

The amount of cash avaialable to a senior with a Reverse Mortgage is based on three criteria:

1. Age of the youngest borower on title
2. The current interest rate
3. The value of the property or the lending limit whichever is less

So prior to the increase if you lived in a county where the lending limit was 200,000 and your house was worth more than 200,000, the amount available would be based on 200,000 instead of the appraised value of your prpoerty.

Now the lending limit has been raised to $417,000 nationwide (no longer fluctuates based on the county you reside in). Again if your house is worth more than $417,000 the amount available is going to be calculated using the $417,000 number instead of the true value of the home. If you home is appraised under $417,000 then the appraised value will be used to calculate the amount avaialable.

This is allowing a large number of seniors to take advantage of this program and makes it more beneficial.

If you have more questions or curious how much cash is available to you under this program, please give me a call - I would be glad to run some numbers for you. We also offer 1 on 1 education to explain in detail how the program works and what it would look like in your situation. I would suggest everyone go through our education process before moving forward with a Reverse Mortgage. We always point out the negatives as well as the positives so you can make an informed decision. We never want to make the decision for you - with our information and your knowledge of your situation, you are the best person to make the decision if a Reverse Mortage is right for you.


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Economy and uncertain investments

I voted this morning and hope that everything works to the benefit of all Americans. I believe in all Americans and know no matter what challenge we face we will survive and prosper. We have faced challenges in the past and are facing challenges today. Right now we are all aware that as costs continue to increase and our "nest egg" is slowly eroding -- what should we do? How do we make sure that we don't outlive our money? Of course my idea has been use a Reverse Mortgage and let your investments grow to increase the power of your retirement, but I thought I would share a link so you could hear what Suze Orman would say to that question.

http://www.cnbc.com/id/15840232?video=903477657

If clicking on it doesn't work, paste it into you address bar.

To your future,


Reverse Mortgage Man
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Reverse Mortgage and Obama and McCain

The election is only 3 short days away. In the past weeks I have heard from many seniors that they want to wait until the election is over before the take advantage of getting educated about the Home Equity Conversion Mortgage. I was puzzled by this, but realize we all have a reason to put of getting an education. And I can appreciate that the time may not be right, but I can't think of a better time and here is why: The interest rates are probably as low as they will be and they are steadily rising (this means less cash for the senior), the lending limit just went up allowing higher valued homeowners to access more cash and if the new president gets to add to their plan...then we can expect more taxes taking more of our retirement assets. We can wait and see, but being in the position to ACT is very important. The education will prepare you to act fast if you need to and if its not right for you, at least you know for sure. Get out and vote on the 4th!

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The ecomic crisis - what should I do?

We all know what is happening all around us - corruption, market failure, housing crisis --a lot of negatives .. So what should we do??? Well first of all we need to take a step back and take a deep breath. Decisions made in "panic mode" very often make a situation worse. We need to evaluate our individual situation and seek out our different options. If we read, watch or listen to the news you will hear about the worst situations in the worst areas of the country and that may not even be close to what you might experience.

Since I focus on helping people with their equity, I want to remind you that if you had your money out of your house and in a safe account (and there are accounts that did NOT lose any money) when your house lost value, you would have the cash in your pocket today!

Now of course you can curl up in the fetal position and pray that things will get better and maybe the government will take care of the mess they created, but you tell me when the Government getting involved helped any situation? Especially when it comes to a financial crisis? The governement is a Financial Crisis!

If you want to move forward and stay ahead of the game, make plans now to remove the equity in your home and put it somewhere safe - if you are not sure of what is safe, may I suggest under your mattress for the time being? As house values continue correcting and you are losing the gain on your investment and your 401(k) is turning into a "201(k)". Lets preserve what we have in our best real estate investment.

Also - its a great time to buy stock - its cheap!

A lot of wealth was made during the depression by the people who had access to their cash and could buy property at "fire sale" prices.

Reverse Mortgage Man
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Daughter Uses Reverse Mortgage to Get Mother In-Home Care

Katrine Denese, 80, suffers from paranoid schizophrenia and Parkinson's Disease. Yet the last thing her kids want is to have her placed in a nursing home. "My mother's home is her security - she loves it there," said Janet Hayes, one of four children raised by Denese. Ms. Hayes acts as Power of Attorney for her mother.

Though still able to function independently at times, Ms. Denise, nonetheless, requires round-the-clock care because of dementia.

Using money from her mother's pension and Social Security, Hayes has hired caregivers to take care of her mother. "They help with everything - cooking, bathing, cleaning - you name it," she said.

But that level of care requires money - lots of it. Last year, it became clear that Denese's pension and Social Security were no longer going to be sufficient to cover the caregivers' costs.

Hayes initially sought financial assistance through the federal government but quickly hit a dead-end. "I didn't get very far with the government," Hayes added. "They wanted to pick the caregiver, and provide coverage only for eight hours a day. My mom, however, needs care 24-7."

Hayes thought about mortgaging her home to pay for a caregiver but, in the end, chose a reverse mortgage. "I could have gotten a lot more money using a home equity loan but the interest rate was higher and there's a monthly payment to make," she added.

Acting as Power of Attorney for her mother, Hayes obtained a reverse mortgage with a line of credit. "What sold me on the reverse mortgage was that even after my mother exhausts all the money, she still can stay in her home for as long as she needs to," added Hayes.

Using the proceeds from the reverse mortgage, Hayes has hired two caregivers. "One person actually lives with my mom and takes care of all her needs," Hayes said. "A second person comes in once a week to relieve the other, who spends a few hours shopping for groceries and handling other errands."

Paying her mother's prescription drug bill isn't as much a chore as it once was, either. "My mother's prescription drug bill runs about $330 a month, and that's with free samples," said Hayes, "so the reverse mortgage helped out there." Hayes recommends the reverse mortgage to any adult child who has to care for their parent but doesn't have the financial ability to do so. "It has been a life saver for my mother," she added.

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What can I do with a Reverse Mortgage?

I found these statistics on the top ten reasons seniors get a reverse mortgage according to AARP.

1. Pay off mortgage (20%)

2. Home repairs/improvements (18%)

3. Improve quality of life (14%)

4. Everyday expenses (10%)

5. Emergencies/unexpected (9%)

6. Pay off non-mortgage debts (7%)

7. Health or disability (5%)

8. Property taxes/insurance (5%)

9. Financial help to family (2%)

10. Investments, annuities, or long-term care insurance (1%)
Household chores (1%) (tie)

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Stay in your home - Reverse Mortgage

A Perfect Program for Seniors Who Want to Stay in Their Homes


You've heard the stories; elderly seniors who cannot afford to pay the expense for the upkeep of their home, a home they may have owned for decades. With a fixed income and increasing demand placed on expenses, the homeowner has few options. Real estate taxes alone force many seniors to make the difficult decision to sell their home and live with family or move to assisted living quarters.

Most elders, 81 percent of those age 62 and older, own their home. Seventy-four percent own them free and clear from any mortgages. The logical answer to reduce the stress of the monthly expense is for the senior homeowner to tap the dormant equity in their home. Equity that has increased dramatically in the decades they lived in the home. Equity that can now be converted to supplement monthly income or use as a line of credit for any purpose.

The program is called the Home Equity Conversion Mortgage or HECM, also known as the Reverser Mortgage. This plan has been around for quite a few years, however the lack of marketing and the limited demand started the program on a slow path. In fact, there were 157 reverse loans originated in 1990, while lenders in 2003 originated 18,097 new loans.

In addition to the lack of demand and understanding, the cost prevented many people from developing an interest in the program. The fees and costs are now predetermined and approved by HUD, the cabinet position of the government responsible for monitoring issues dealing with consumer protection and fairness in housing. Each loan has a 2 percent fee paid to the lender and a 2 percent fee paid to HUD in the form of mortgage insurance protection. Other closing costs such as title expenses, appraisal and deed recording fees are also necessary. All costs are deducted from the existing equity in the home, therefore, requiring no out of pocket monies from the Homeowner.

The Reverse Mortgage requires no processing of the homeowner, it's an automatic approval. The age of the owner and the value of the home determine the amount of money available to the homeowner.

The minimum age to qualify for the plan is 62. If two borrowers are applying for the loan, the younger of the two is used to calculate the maximum money available. For example, if the younger homeowner is 76 years of age and the home's value is $225,000, the payout to the homeowner will be in the range of $150,000. Again, that $150,000 may be tapped as a line of credit or added supplemental income. This income is received income tax free and will have no ill affect on other earnings the homeowner may be receiving. There are no restrictions on the line of credit proceeds. Homeowner can pay existing liens on the property, make improvements , gift money to children or grandchildren, take trips or just enjoy the peace of mind financial security provides.

For the Seniors who decide the monthly income would be more practical, those checks would be paid until the passing of the last remaining recipient. The example of a $150,000 payout may translate into supplemental income of $950 per month. More than enough to pay the added tax assessments and other unforeseen expenses that otherwise would have driven the homeowner to consider selling their home.

There are numerous purposes and examples of how the reverse mortgage serves the needs of those homeowners who wish to remain homeowners. An expression we hear often is the Reverse Mortgage offers a "quality of life" for people who deserve the opportunity to enjoy their golden years.

Get your FREE $30 gift card by taking advantage of FREE Reverse Mortgage Education over the phone. www.30dollargascard.com (866) 800-0280

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Cashin In On Your Home - Reverse Mortgage

It's no surprise that reverse mortgages are becoming popular among seniors
By Leonard Wiener
Posted 6/5/05

For many of today's retirees, a home can seem like Fort Knox without the key. Escalating real-estate prices have caused many seniors' homes to skyrocket in value. But unless they're willing to sell, it may be an inaccessible gain during a time in their lives when extra income and liquid assets would be most welcome. There is a way to tap those profits--a reverse mortgage. "Many seniors are sitting on home equity they never dreamed of," says realty expert Tom Kelly, whose recent book, The New Reverse Mortgage Formula, is a guide to what a growing number of elderly homeowners see as a way to have their home and cash in on it, too.

A reverse mortgage allows a homeowner to borrow against the equity in a home, but unlike a home-equity loan, the loan and interest do not have to be repaid until the home is sold. The loan might be in the form of a line of credit that can increase over time and be drawn on as needed, a lump sum payout, a fixed monthly check for as long as you live in the home, or a mix of options. There is minimal or no upfront cost, as closing and other fees can be wrapped into the loan. The reverse mortgage also pays off any existing mortgage, ending that monthly bite on income. Cleo Dunn, an 88-year-old widow in Leawood, Kan., says the $1,200 a month she receives from her reverse mortgage supplements her Social Security check. That helps her pay medical and other bills while remaining in the home she loves. "I have this most beautiful garden," she says. "I have a life here I could not have anyplace else."

Reverse mortgages have been around for years, but it wasn't until the early '90s that they began earning respectability after the Federal Housing Administration started insuring the mortgages for repayment to lenders. Even so, they've been a niche product; only about 40,000 were done last year. But an aging population is expected to begin tapping into home equity more aggressively. New loans have doubled since 2003. Interest rates on reverse mortgages are mostly about 5.3 percent now but can also be about 6.5 or 8.5 percent, depending on the type and size of the loan.

Bolstering demand are seniors who see the loans not as a lifeline but as a route to a more active life. Francisco and Joanne Santana-Montez of Antelope, Calif., 69 and 68, will use their reverse mortgage line of credit to finance a dream trip to Cancun, Mexico. "Our adviser told us we're spending our kids' inheritance, but our children are delighted," says Joanne.

A prime consideration when getting a reverse mortgage: age. The older you--and a spouse--are, the more cash you can get since the loan will presumably be shorter in duration. A 75-year-old with a fully paid-off $250,000 home in suburban Cleveland, for example, might receive about $917 a month. Or, as is more popular these days, the homeowner would qualify for a line of credit of about $140,000. A 70-year-old Clevelander would nail down less, about $791 a month or a $130,000 line of credit; an 80-year-old would draw more, a monthly check of about $1,099 or a $152,000 line of credit.

Other variables, such as lending limits and interest rates, also determine how much of a home's equity you can borrow. But the homeowner can never end up owing more than the home eventually sells for, even if the sale doesn't cover the borrowing and accrued interest. If a sale more than covers the debt, you (or your heirs) get the excess.

About 95 percent of reverse loans, made by mortgage brokers and banks, are an FHA-insured home equity conversion mortgage, or HECM. The insurance enables HECMs to carry a low interest rate and yield more to borrowers, even with a fee included for the coverage. Impeding some borrowers are geographic limits on the amount of a home's value, regardless of market worth, that will be considered in the calculation. While a value cap of $312,895 applies in the Long Island suburbs of New York, for example, the lid for homes in Iowa is $172,632, according to Ibis Capital, a reverse-mortgage software and data firm in San Francisco. One result: A $300,000 home in Iowa that might qualify for a $100,000 line of credit could get $178,000 if it were in Long Island.

Handy help. Homeowners in costly abodes, perhaps $600,000 and up, may do better with the Cash Account reverse mortgage created by Financial Freedom Senior Funding Corp. in Irvine, Calif. Since there is no valuation cap, borrowing is unlimited. Mortgage giant Fannie Mae offers a reverse-mortgage option with a twist: A senior can buy a new home and get a reverse loan in a single transaction. AARP offers a calculator and a guide at aarp.org/money/revmort to help clarify the choices (and a free booklet for those who call 800-209-8085). Help is also available from Financial Freedom ( financialfreedom.com ) and at reversemortgage.org , the website of the National Reverse Mortgage Lenders Association (866-264-4466 for a brochure by mail).

Reverse mortgages should be utilized with great care. That's why modern loans include consumer safeguards such as counseling. You're eating up equity in the home--funds you may later need for healthcare or sudden bills, or to move to assisted living. Closing costs and fees can make the deal costly if the loan is held for only a few years, especially if you use just a small part of the line of credit or opt for monthly disbursements. If interest rates trend higher, reverse loans will pay less to new borrowers and existing borrowers will rack up heftier interest charges.

Experts say some people may do better selling their home to raise cash and moving to a smaller, less expensive place. Still, being able to stay put when finances might dictate otherwise and discovering you can go to Cancun have a value all their own.

This story appears in the June 13, 2005 print edition of U.S. News & World Report.



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Reverse Mortgage Scenario

Q: My husband and I are retired with a total annual income of $40,000. We owe $145,000 on our home, which is worth $475,000. We don't have any extra to play with. We would like to know whether you would advise us to consider a reverse mortgage.

Jennie

A: A reverse mortgage could pay off your existing mortgage and eliminate the monthly mortgage payments you are currently paying. This could free up some income for you to play with each month.

Here's essentially how it would work. A reverse mortgage would pay off your existing mortgage balance of $145,000. Then, rather than having to make monthly interest and principal payments, the interest charged on the loan would simply add to the balance of the loan.

Let's assume your home will appreciate by 4 percent in the coming years, and the reverse mortgage interest rate averages 6 percent. Ten years from now, your home is worth $703,000 and the balance on the reverse mortgage is $260,000. In 20 years, your home is worth $1,040,000 and the loan balance is $465,000.

When you move from the home, sell the home or pass away, the loan becomes due, and any equity in the home goes to you or your heirs. In the event the mortgage balance is greater than the value of the home, you can walk away from the loan without paying a dime.

In addition to using a reverse mortgage to pay off your existing mortgage, you could also pull out extra cash, secure a line of credit or receive monthly income. Obviously, the more money you pull out, the less equity you'll have in your home.

Unlike a traditional mortgage, the startup costs are high, so you wouldn't want to use a reverse mortgage if you plan to move soon.

A reverse mortgage can be a great option, but for those who want to leave a truckload of money to their kids, paying off a home loan out of retirement income would be a better option.

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Rising cost of fuel and Reverse Mortgages

What is the connection, you might ask between reverse mortgages and the price of oil?

What is the connection, you might ask between reverse mortgages and the price of oil? And if you or a loved one are a senior homeowner age 62 and over but don't drive, maybe you've been thinking that you are lucky because the price of gas and oil really doesn't affect you as much. But the simple truth is that the cost of oil and the rising cost of gasoline affects everyone who has to eat or drink and that includes us all, drivers or not!

Stop and think about it for a minute. Take a look at the price of the food on the shelves in your local grocery stores. That food was trucked in and that requires fuel to get there. When the costs of oil are so high, then it costs so much more to bring those groceries to your local supermarket. And then take a look at the cost of the produce.

With the high cost of oil, many different forms of alternative fuels are being developed and several of these alternative fuels require things like corn to make them. This drives up the cost of not only corn, but everything else that uses corn. That includes feed for almost all other animals and that also drives up the cost of chicken, beef, some dog foods and well, you get the picture! Add to that the floods in the central states where the most corn is grown and the damage to the crops and that means that this year's harvest is going to be smaller and even more expensive.

So how does this all tie to Reverse Mortgages? When you're living on a fixed income, all of this rising cost may be too much to bear. That's where senior borrowers age 62 and over may be able to utilize the equity in their home to meet the rising cost of living in this economic environment.

The government-insured Reverse Mortgage known as the Home Equity Conversion Mortgage (HECM or Heck-um) is designed to allow senior borrowers to access the equity in their home for any purpose. Senior borrowers can use the money to retire existing debt, for medical expenses, to make their homes more senior-friendly, or for any purpose they choose. But this can be especially helpful now that other costs have risen so dramatically.

So whether you or your loved ones drive or not, the rising cost of oil, the increased demand for corn and the flooding and lower crop production is going to take a bite out of everyone's budget. There's just no escaping the far reaching effect that all these factors have on everything else. The reverse mortgage may be just the bridge many senior homeowners can use to cross the rough spots brought on by rapidly rising costs that may be out pacing fixed incomes.

Get your FREE $30 Gift card by taking advantage of FREE Reverse Mortgage Education over the phone - visit www.30dollargascard.com or call (866) 800-0280

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Mr. and Mrs. Jones Scenario

Mr. and Mrs. Jim Jones called me recently to find out the pros and cons of reverse mortgages. When I sat down with them, the first thing I asked them was “what are your reasons for considering a reverse mortgage?” After some discussion about their reasons, I then asked them if they were planning on staying in their home for the foreseeable future. Although none of us has a crystal ball to predict what will happen tomorrow, their answer lets me know whether they are planning on aging in their home and consequently whether a reverse mortgage may be something for them to consider. If they said, “No, we want to move into an assisted living apartment next year”, I would tell them that a reverse mortgage probably wouldn’t be the most cost efficient way for them to reach that goal.

Once I had an idea of their goals and found out that Mr. Jones and Mrs. Jones are both still working at age 71 and 75 not because they want to but because they need to, I was able to tell them the basic overview of an FHA (Federal Housing Authority) reverse mortgage. Strictly regulated by the FHA and incorporating many consumer safeguards, the loan will not become due until the Jones both move out of the home permanently, and they will never owe more the fair market value of the house. If something happens to the bank that their loan is with, the FHA will step in and ensure the continuity of their loan without skipping a beat.

The first question that Mrs. Jones asked me about was the bank owning her home, and I assured her that the bank will never own her home, that she and her husband will always be the owners, and there will be a lien on her home for the amount of money that she has borrowed, just as there is with a regular mortgage. This brought us to a comparison of all available reverse mortgage programs that I used to show the Jones how much money they will qualify for. Since Mrs. Jones is the youngest borrower the amount is based on her age, the appraised value of the home or the lending limit set by FHA in their county (whichever is less) and the current interest rate. Their house is worth $370,000 and the lending limit in their county is $362,790, so with the current interest rate they qualified for a reverse mortgage amount of $233,452. They have a home equity line of $25,000 which will be paid off with the proceeds from the reverse mortgage and a credit card with a balance of $7,000 that they would like to pay off to avoid paying the interest rate of close to 18%. The current interest rate for the FHA Home Equity Conversion Mortgage (reverse mortgage) is only 4.15%.

Mr. and Mrs. Jones asked me if the closing costs could be rolled into the loan, and I told them yes - there are no out of pocket costs to the borrower. I told them that the next step before we could move forward to the application submission was the fulfillment of the counseling requirement. I gave them a list of counselors and told them to pick whichever one they wanted and set up either a face-to-face or telephone interview with a government appointed Housing and Urban Development (HUD) counselor. There is no charge for this session and it is a requirement put in place by the FHA to make sure that I am doing my job in explaining reverse mortgages well, and also to make sure that the client isn’t being taken advantage of by an individual or organization.

Mr. and Mrs. Jones were enthusiastic about getting rid of their mortgage payment and their credit card payments, which will allow them to increase their monthly income by that amount every month. They will have no payments on the reverse mortgage until they both move out of the home permanently. The remainder available to them - $201,452 - they decide to put into a credit line that will not accrue interest until it is used. Instead, that amount will grow for them at approximately 4.15% a month. $201,452 growing at that rate generates $683.25 per month. What does this mean to the Jones? Well, it means that they can use $683.25 per month for years and their credit line will always remain at $201,452. Of course, if they use more per month then the balance will adjust accordingly. The cash they use is tax free because it is not considered income by the IRS, nor does it affect their Social Security or Medicare benefits. They are responsible for their taxes and insurance and for maintaining their home, just as they always have. They will be able to use the money any way they want: they can now make contributions to their church that they were previously unable to afford, go on a vacation, buy a new car, pay for rising health care costs or help their grandchildren pay for college.

For myself, the best part of my job was that I was able to spend an afternoon with two people that I would not have had a chance to meet otherwise, and they welcomed me into their home and shared the story of how they met and told me about their children and their grandchildren. They found out that a reverse mortgage could help Mr. Jones finally retire and worry a little less about how Mrs. Jones will make ends meet and be able to stay in their home if something should happen to him. The Jones had spent most of their adult lives caring for others and never quite being "comfortable" financially - now, finally, that was going to change.

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Who is doing your Reverse Mortgage for you?

10 REASONS TO CHOOSE MONEYWISE!



1. All we do are Reverse Mortgages:
Our focus is the Reverse Mortgage program – We pride ourselves on knowing everything there is to know about this great opportunity.

2. Communication:
You will get an update on your status every week guaranteed – if not we will buy you lunch!

3. Live People:
24 hours a day, 7 days a week the phone will be answered by a live person! ABSOLUTLEY NO MACHINES!

4. Relationship:
When you work with Moneywise, you don’t become a number. We want to get to know you as a client and a friend!

5. Work with the owners:
You will always talk to a decision maker.

6. Best Product for your situation:
We understand your situation is unique and we will help you choose the best program. If we feel it is not for you we will tell you that.

7. Strategic Alliances:
If we can’t improve your life, we will get you in-touch with a trusted advisor that can.

8. Reduction of bills:
We are trained in how to negotiate with credit card companies and medical companies to reduce your outstanding bills.

9. Experience:
Over 50 years of combined experience working for you every step of the way.

10. Creativity:
We pride ourselves in being able to take a seemingly impossible challenge and find a solution. If your bank said NO we can say YES!


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Postponing your Reverse Mortgage

I understand that you are planning to wait for a few year before you do your Reverse Mortgage Plan. You probably don’t need the money now and when you are older, you will have more cash available. That is what would appear initially, but let me show you some numbers and explain how this works:

For this example let’s use the following information:

Age of homeowner = 69
Home Value = $200,000
Interest Rate = 5.12%

Using this information you would be able to put $119,324 in your line of credit.
Cash in your line of credit will grow at 5.62% (0.5 percent more than the interest rate)
If you didn’t use the cash until you were 74 (5 years) the amount available to you would be $157,935.

Age of homeowner = 74
Home Value = $243,331 (4% appreciation over 5 years)
Interest Rae = 5.12%

Using this information you would have $157,970 in your line of credit at age 74.

The difference between what you have is an extra $35 over 5 years (isn’t enough to fill your gas tank). But if you do your reverse mortgage plan NOW what are the advantages?

1. If a financial need arises unexpectedly in the first 5 years you have cash available.
2. If an opportunity arises unexpectedly and you need cash you have it available.
3. If a nursing home situation arises unexpectedly you have limited protection.

But these are arbitrary numbers and probably don’t fit your situation so to decide which is the best way to go, give me a call and we can sit down with the exact figures to determine which is the best option in your case.

Reverse Mortgage Man
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Just Scraping By

If I had a nickel for everyone that told me that they aren’t interested in a Reverse Mortgage because they are “doing fine” or “just scraping by” I would be on a beach somewhere enjoying a cool drink!

Whenever I hear those three words, I take a moment and try to imagine what my retirement will look like. Will I be happy in my retirement years – just scraping by? Is that really why I am working so hard to raise my money and hopefully put a little away so in my retirement I can just “scrape by”?

What happened to the “Golden Years”? What happen to enjoying retirement? What happened to all that money that I worked so hard for over the last 40 years? I paid off my house, raised my family and they had nice things now I finally have the time to do all the things I put off so I could take care of my family…but I can’t because I am “just scraping by”.

What a sad state of affairs – is this what our seniors have come to expect – scrape by all your life taking care of your family and then retire! Oh and continue to “just scrape by”.

What I offer isn’t for everyone, but it is a tool to help people enjoy their retirement. It is an option to allow you to enjoy your “Golden Years”. But we all know that ignorance is bliss – but not exploring your options and “just scraping by” doesn’t sound to blissful.

I actually heard that the money one mother gets from her Birthday, Mothers Day and Christmas takes care of her – either she gets a lot in those cards or she can get by on barely anything (I want her Christmas list). She is just scraping by!

Well the information is free, the education costs nothing – but ignorance can be very costly.

Oh and if you enjoy the “challenge” of “just scraping by” – then it would be a waste of time to get together – but if you want more out of life than to “just scrape by”, maybe if might be worthwhile to talk!

Reverse Mortgage Man
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Letter From Peter Bell, President of National Reverse Mortgage Lenders Association, regarding the Economic Stimulus Bill

As I’m sure you’ve probably read, last week Congress passed an Economic Stimulus bill, H.R. 5140 that includes a temporary increase in loan limits for Fannie Mae, Freddie Mac and FHA to 125% of area median home prices, or a maximum of $729,750 – for the remainder of this year only. The bill will be signed into law by the President sometime this week. Please be advised that the bill specifically excludes HECM from the new temporary FHA loan limits.

We tried working many angles to have the larger loan limits apply to HECM, but were unable to accomplish this. The basic problem is, as you know from previous NRMLA legislative updates, there are a few members of the Senate who are vociferously opposed to expansion of the HECM program. Particularly outspoken among such opponents is Sen. Tom Coburn, a fiscally conservative Republican from Oklahoma, who is vehemently opposed to expanding this government program because he believes that FHA will “crowd out” other private sector reverse mortgages. At the very least, Coburn feels that Congress should wait until the GAO report on the HECM program called for in the FHA Modernization bill is completed before taking any action on the program. (For background on Coburn’s concerns, I suggest you read the Congressional Record or view the video of floor action from when the FHA Modernization bill was debated and passed in late December.)

The Economic Stimulus package was moved through Congress with tremendous speed and completed within three weeks – a highly unusual accomplishment in this Congress. There was a general consensus among many members of Congress, White House staff and the Treasury Secretary to try to pass a narrowly focused bill that avoided any provisions that might slow it down. Indeed, the Senate in the end backed down from including several additional items that it had considered including and instead passed a version very similar to the House bill with only a few additional items. Because Sen. Coburn could have slowed down the stimulus package if it included increased HECM limits, a decision was made to specifically exclude Sec. 255 (the section of the US Housing Act authorizing HECMs) from the stimulus package.

Where this leaves us then, is that we are now back to looking to the FHA Modernization bill to provide us with a single national loan limit (or higher loan limits) for HECMs, along with the several other HECM provisions in that bill that we have previously reported (elimination of the authorization cap, HECM for home purchase, HECM for coops, the GAO study and the new limitation on origination fees.)

There are also a few questions raised by passage of the Economic Stimulus bill. First of all, will the new temporary loan limits for Fannie Mae be applicable to HomeKeeper reverse mortgages? Secondly, since the language in the pending FHA Modernization bills would create a single national loan limit for HECMs at the GSE loan limit, which at the time of enactment was $417,000 nationwide, would we now use the higher temporary limits or would $417,000 be our cap? We are trying to obtain answers to both of these questions and will report to NRMLA members as soon as we know.

Yours sincerely,
Peter H. Bell, President
National Reverse Mortgage Lenders Association

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Want to Refinance? Rates Low, Oh Sorry, You Don’t Qualify.

Everyone has heard that rates are low. Prime rate has dropped 2%since last year. Long term 15 and 30 year rates are still at or below 6% for the most part. So, why isn’t there a huge refi boom going on? Well, it is starting but it will not be nearly the same as 2-3 years ago when we saw record billions of refinancing and purchases. The reason: liquidity and much tighter underwriting standards. There simply are not as many applicants being approved. Even though there are 95-96% of mortgages paying on time that were issued to good borrowers who are able and willing to pay their mortgages, the requirements have risen dramatically in an effort to eliminate the bad apples among borrowers and lenders.



That means that hundreds of thousands of applicants that should be able to refinance out of adjustable rate loans will not be able to because of new stringent requirements. These requirements usually are so high that many borrowers are simply denied even if they would have qualified last year at this time. The biggest group of folks facing denials are small business people and real estate investors who have wonderful credit and have never missed a payment in their lives. However, if income cannot be proved beyond a doubt on tax returns for the last 2 years, they will look like bad borrowers and will be denied any refinances or purchases. That may not make sense, but it is reality. The new lending requirement pendulum has swung way to the other side. Everyone knows things had to be tightened up because lending was not selective enough, but if it goes to far, it will delay a healthy market return because loans will be denied to borrowers who can really afford them!



So, what is the good news? Remember all 3 C’s of lending. If you have good Credit, easy to verify income with either tax returns or a W-2 (Capacity), and a home (Collateral) that has not declined in value, you will have no problem doing a refinance within your approved debt load. The rules are still tightening up, so what works today, may not work tomorrow. If you are going to get money out of your home, now is the time to get it before there are changes in the rules or in your personal situation that would disqualify you and lock up the equity in your home.

Reverse Mortgage Man
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15 Financial Points in todays Economy

1. 3-IN-A-ROW - The S&P 500 has fallen for 3 consecutive months (November-December-January), the first time the stock index has done that since February 2003 In the 1-year after its last period of 3 straight down-months, the S&P 500 gained +39% (total return). The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).



2. AFTER A BAD MONTH - The S&P 500 lost 6.0% (total return) in January 2008, the 17th time since 1990 that the stock index has fallen at least 5% in a single month (i.e., 17 times in the last 217 months or 8% of the time). In the 6 months following the previous 16 market drops, the S&P 500 has had a positive total return 8 times and suffered a negative total return the other 8 times. The subsequent 6-months have been as good as up +30% and as bad as down 19% (source: BTN Research).



3. WHAT HAPPENS NEXT? - The NASDAQ Composite fell 9.9% in January 2008, its 19th worst monthly performance since its February 1971 inception (i.e., 19th worst out of 443 total months). Of the 18 worse-performing months in the index’s history, 10 of them occurred during the 2000-02 bear market. The 6-months following the previous 18 market drops have been as good as up +53% and as bad as down 50%. The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system (source: BTN Research).



4. BEAR SIGHTING - From a 10/31/07 closing value of 2859, the NASDAQ Composite fell 20.3% to last Wednesday finish of 2279, meeting the “20% decline” definition of a bear market (source: BTN Research).



5. CLOSE TO AVERAGE - The S&P 500’s actual total return in each of the past 4 years (2004-07) has fallen within a range of “plus or minus 10%” from its trailing 50-year total return average of +11.0%, the only 4-year period in the last half-century when this has occurred (source: HLS Research).



6. A GOOD YEAR - The largest capitalized stock in the S&P 500 at the end of 2007 (worth $512 billion) is also its most profitable, earning a record $41 billion last year, equal to $1,287 of profit per second (source: AP).



7. MANY ZEROS - The fiscal year 2009 budget submitted by President Bush to Congress last Monday calls for government spending of $3.1 trillion for the year beginning 10/01/08. If you were to spend $1 billion a day, it would take you 8 ½ years to spend $3.1 trillion (source: White House).









8. BREAK THE BANK - Planned expenditures for Social Security in fiscal year 2009 are $649 billion, an increase of +66% in the last decade (source: White House).



9. ROUGH TIMES AHEAD? - A Wall Street firm has predicted that the average US home price will drop 25% in the next 2 years. Chris Flanagan, head of research at JPMorgan Chase for asset-backed securities, believes home prices will suffer a major fall before hitting bottom in the year 2010 (source: BusinessWeek).



10. NOT EARLY ENOUGH - Americans work on average 6 years longer before retiring than they would have liked to. Although the ideal retirement age for Americans who were surveyed is 58 years old, their actual retirement age was 64 years old on average (source: AXA Equitable Retirement Scope).



11. BEGIN TODAY - 51% of 401(k) plans in the USA allow newly-hired employees to begin elective-deferrals immediately upon starting work without any waiting period (source: PSCA).



12. I MIGHT BE WRONG - Even though 57% of employees that are deferring at least 8% of their salaries into an employer-sponsored 401(k) plan say they enjoy managing their own finances, 65% of this high-saver group are not confident that their investment choices today will ultimately prove to be correct decisions (source: MassMutual Financial Group).



13. SUPER WRONG – In spite of being 12-point underdogs in Super Bowl # 42, the New York Giants beat the favored New England Patriots 17-14. The Giants won their last 11 games they played on the road, including 4 in the playoffs (source: BTN Research).



14. THE HIGH COURT - 4 of the 9 Supreme Court justices are at least 71 years old, including Justice John Paul Stevens who will turn 88 years old on April 20th (source: Supreme Court).



15. I QUIT – The presidential election is still 267 days from today (11/04/08), yet the long campaign has already seen 13 announced candidates dropping out, including Democrats John Edwards, Bill Richardson, Christopher Dodd, Joe Biden, Dennis Kucinich and Tom Vilsack, along with Republicans Mitt Romney, Rudy Giuliani, Fred Thompson, Tom Tancredo, Sam Brownback, Tommy Thompson and Duncan Hunter (source: BTN Research).

Reverse Mortgage Man
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Who can get a Reverse Mortgage?

We know that reverse mortgages are not for everyone, because not everyone qualifies to take out a reverse mortgage. Check out below if you are eligible:

You must own your home. All of the owners must be at least 62 years old or older.
Your home must be your principal residence - which means that you must live in it more than half the year.

For the federally insured Home Equity Conversion Mortgage(HECM), your home must be a single-family property, a 2- to 4-unit building, or a federally approved condominium or planned unit development (PUD). For a Fannie Mae Home Keeper mortgage, you must have a single-family home or condominium.

The value of your home must qualify to satisfy any existing liens.
If you have any debt or lien against your home, it can be paid off at the reverse mortgage settlement.

My goal is to insure that you feel comfortable about the ins and outs of a reverse mortgage. If I can help you make next month better for you than this month, then our mutual goals will be achieved.

Reverse Mortgage Man
(866)800-0280
www.moneywise123.com
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Reverse Mortgage Objections

How valid are common objections?

If you're like most senior homeowners, you worked hard for many years to eliminate your mortgage so you'd own your home free and clear or have a very low mortgage balance. After what you've gone through, the thought of reversing that process and rebuilding the debt owed on your home can be hard to phantom. Furthermore, reverse mortgages are a relatively new type of loan that has many misconceptions. We can answer your questions & give you a comfort level and the proper information to make an intelligent informed decision as to if a reverse mortgage is right for you.

Can you lose your home?

Many seniors don't fully understand reverse mortgages and often have preconceived notions, about how these mortgages work. Seniors with home equity often erroneously think that taking a reverse mortgage may lead to being forced out of their homes or ending up owing more than the house is worth.

The fact is you won't be forced out of your home. Nor will you (or your heirs) end up owing more than your house is worth. Federal law defines reverse mortgages to be non-recourse loans, which simply means that the home's value is the only asset that can be tapped to pay the reverse mortgage debt balance. If a home's value does drop below the amount owed on the reverse mortgage, the lender must absorb the loss.

Would a home equity loan or second mortgage work better?

Some seniors who are intimidated by having to understand reverse mortgages wonder whether it would be simpler to get a home equity loan or a new mortgage that allows them to take some equity out of their home. The problem with this approach is that you now you have to begin paying traditional mortgage loans back soon after taking them out, thereby cutting into your monthly cash flow & savings.

Suppose that you own a home worth $250,000 with no mortgage debt. You decide to take out a $100,000, 15-year mortgage at 8 percent interest. Although you will receive $100,000, you'll have to begin making monthly payments of $956. No problem you may think; I'll just invest my $100,000 and come out ahead. Wrong!

Most seniors lend toward safe bonds, which may yield in the neighborhood of 5 to 6 percent - yielding about $416 to $500 of monthly income - far short of the amount you would need to cover your monthly mortgage payments. You could invest in stocks and earn the market average return of 10 percent per year, which is by not guaranteed, your returns would amount to more - $833 per month - but still not enough to cover your monthly mortgage payment. (Also note that most income from stocks and bonds is taxable at both the federal and state level. By contrast, reverse mortgage payments you receive are not taxable, yes, tax free)

Also, another downside of taking out a traditional mortgage to supplement your retirement income. The longer you live in the house, the more likely you are to run out of money and begin the possibility of missing loan payments because you drain your principal (savings) to supplement inadequate investment returns and cover your monthly loan mortgage payment. If that happens, unlike with a reverse mortgage, you may be faced with foreclosure on your loan, and you can lose your house.


Reverse Mortgage Man
(866)800-0280
www.moneywise123.com
http://forum.moneywise123.com