Archive for November 2007

Giving the Gift of “Peace-of-Mind”

November 27, 2007

j0407569.jpgOne of the things I love about doing what I do is the “feeling” that I am able to give to those who find themselves in financial pressures. Reverse mortgages are really a “Peace-of-Mind” product for those who want more out of life, but are held back by the financial pressures that surround them. In talking with hundreds of seniors over the course of almost three years, the fact that they are talking to me about a reverse mortgage is not that they have been careless with their money over their life. The majority of seniors state that unexpected events during retirement have sucked their savings dry. Whether these “unexpected events” are related to health issues, legal events, or poor business outcomes, the event changed their financial future.

Have you ever been in such a financial pinch that you lost sleep over it? Have you ever felt helpless in overcoming a financial obligation(s)? Or, have you ever looked at your life and felt like you wanted to do more to improve your quality of life? Most of us can answer “yes” to at least one of these questions. As a person in his working years, I can simply work more hours, or get another job in order to get enough money to do what I desire. But for those past their working years, they find themselves in situations that leave them feeling dependent and vulnerable to the next “life event.”

Giving “Peace-of-Mind” as a gift is one of the most satisfying things there is. It almost compares with the overwhelming pleasure of being loved and completely forgiven, even when you don’t deserve it. For those who have experienced such gifts, it projects freedom and an improved quality of life.

Reversemortgage.org is a website sponsored by The National Reverse Mortgage Lenders Association. This website has a lot of information about reverse mortgages and the industry. It also has a link on the page (called Borrower Profiles)that allows you to read about how other people have used a reverse mortgage. It is interesting to see all of the different ways in which people have chosen to improve their quality of life and give to themselves “Peace-of-Mind.” Enjoy!

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Independence is HUGE!

November 19, 2007

j0422587.jpgI sort of get a kick out telling people that I am in the reverse mortgage industry. The look on their face often resembles confusion. It is written all over their faces . . . . “Oh, you’re one of those guys.” I so badly want to respond saying, “No, no . . . . you don’t understand.” Because most people don’t understand.

Most people who know a little about reverse mortgages look at it from a financial impact. Questions about the heir’s inheritance or whether it is really a good financial decision for seniors, often is the turn that the conversation takes. Most people don’t understand the biggest issues that seniors face, and that involves their “independence.”

I have mentioned this in some of my other blog entries, but I can’t overstate this issue. The fear of losing one’s independence is huge. I know that people in my generation find it difficult to simply ask for help. You know the story . . . a project needs to be completed and having someone help complete the minor task would be a huge help. But, for some reason we just can’t get the courage to ask for help. This is usually a man’s problem. And compared to a senior’s situation, it doesn’t compare.

Consider a senior who finds it difficult to simply make the mortgage payment and have enough money left over to eat, or pay for the water, electricity, gas, etc. At some point in time, they get to a situation where they want to cry “help.” But they fear that they may lose their independency and become “dependent” on someone else, just to survive. Ugh . . . it can be debilitating for a senior and cause them great stress.

Reverse mortgages simply allow people to live at peace, and remain independent. Independent from their family, friends, the government, and have some control over their lives. To be dependent on anyone can be a humiliating thing for a lot of people. It can impact how one lives, where one lives, and the quality in which one lives. A reverse mortgage is simply a tool to help those who want to remain independent, an ability to do so, and live their Golden Years in Golden Ways!

I value your input and response to my blog entries. If you have a moment, feel free to reply and leave a comment. Thank you!

Reverse Mortgages: The Joy of No Payments

November 16, 2007

j0409727.jpgFor many of us, we look forward to the time when we no longer have any mortgage payments. It is something we look forward to as it will increase our monthly cashflow during our retirement years. It will allow us to have more freedom and do some of the things that we have always wanted to do: travel, purchase some amenities, etc. It will allow us to feel more free with our life!

Many years ago, it is my understanding, that people use to have “Mortgage Burning Parties.”  Now this was before my day, but to finally get out from under a house payment and fully own one’s home was a great accomplishment. So friends and family gathered for a celebration.

Today we look back at those days and think about the simplicity of life.  Our world is much different today. I’ve read school posters that hung in the hallways of schools and read the rules of conduct: No chewing gum, no long hair, no cursing, etc. Today, we are troubled by much more serious issues. Things are more complicated, or so it seems.

One of the common concerns in the “old” days among seniors was “Will I live long enough to enjoy my retirement?” The average life expectancy in 1900 was around 47 years old. Today we are expected to live on an average of 77+ years. And it will continue to grow. By 2050 there is expected to be over 19 million people 85 years or older. As all as I can say is “Wow”! For those who have not paid off their mortgage, that is a long time to continue making payments on a fixed income.

It brings me to this point: we use to only have to plan on living a few years after retirement. Today, one of the longest life stages is retirement. If we are living longer, we need more money to survive those retirement years. I am finding that many seniors did not plan on living as long as they have, and their money is running out. Whether it be that things are getting more expensive, they didn’t plan accordingly, or that we just have more years to spread out our savings, we find ourselves financially strapped.

The idea of a reverse mortgage, though fairly new compared to many financial products, has been around since the 1960’s. It was not a very good financial product at that time, however, as it did not have the safety measures that it has today. But it was used in fairly desparate situations when people needed quick cash and were willing to risk losing their homes. Unfortunately, some did. Today, all of those risks are virtually gone and seniors do not have to worry about their homes being taken over by the lender.

Today, reverse mortgages are Non-recourse. This means that the only security in the loan is the property. At no time will other assets be used to pay back the loan. The loan payoff balance can NEVER exceed the value of the home. Also, the owner of the home is still the OWNER OF THE HOME. They don’t sell it to the lender. In fact, each person on the title is required to meet the age qualification of 62 years old. The plan simply allows them to access their equity, payoff any remainding mortgage balance, and not have payments for the extent of the time they live in the home. By paying off the mortgage and having no more mortgage payments, we can once again see all of the reason to throw a party.

Long Term Care and Reverse Mortgages

November 14, 2007

j0422131.jpgMichelle Singletary’s column this morning was on Long Term Care Insurance. I always enjoy Michelle’s insight. She emphasizes the need for Long Term Care Insurance, which covers the cost of nursing homes, assisted living facilities and in-home care, which includes custodial care. That is, helping someone with activities of daily living (ADL’s).

I am continuously talking with people who have been in the position of being a care giver for someone close to them. This is not an easy job. It takes both emotional and physical strength, and often wears down a person who also has their own family to care for. We often call this the sandwhich generation: those who care for their parents and their children. How difficult the circumstances are and the challenges it brings to a family.

A survey recently released by the America’s Health Insurance Plans found one in four baby-boomers assume they have coverage for long term care. The reality is that most do not. Medicare only covers specific components of care and you have to meet certain conditions. Secondly, Medicaid is coverage for people in poverty and one has to spend down their assets in order to have medicaid cover expenses. This is not what most people want to do.

One of the difficult components of long term care insurance is the expense. It can be very expensive, especially if one waits too long. Based on a lot of retirees, their fixed income does not allow for an added expense, especially a steep one. It is a growing trend to begin looking at how reverse mortgages can help in the funding of long term care insurance. This is a situation that needs to be evaluated very carefully. The reality is that six out of 10 Americans who reach age 65 will need long-term care at some point in their remaining lives.

Reverse mortgages have become very flexible and may be a great fit for someone wanting LTC Insurance. It can be structured in a way that protects a portion of the equity, if that is what is desired. Secondly, if someone can not qualify for LTC Insurance, a reverse mortgage may provide enough funds to actually finance any long term care.

I met a man two years ago who had a long term care policy, who had to drop it after 20 years because of a rate increase that he could not afford. One year after cancelling his policy his wife was diagnosed with Alzheimer’s. He wasn’t told about the option of a reverse mortgage to help to finance the LTC Insurance premiums, so he lost 20 years of premiums in his policy, plus he had to cover his wife’s medical expenses as the disease progressed.

What a tragedy! He had wished he had learned about a reverse mortgage sooner. It simply reinforces my belief that everyone should learn about the basics about reverse mortgages. It just might provide a solution to a difficult situation for someone that they care about.

55-Alive! – Social Networking for Boomers

November 8, 2007

j0422339.jpgA couple of weeks ago I received an Inc. Magazine article from a friend that pitches a new online community targeted to baby boomers. Now whether it actually thrives or not, I don’t know, but the website is called 55-Alive! and I think it may be a hit for many seniors.

It is well understood that the senior demographic (age 65+) is one of the fastest growing users of the internet. Though many seniors fear it, recent studies show that computer users show less depression tendencies than those who do not use a computer. Where loneliness and a lack relational experiences seems to be the major factors in depression among the elderly, new technology has allowed people from all over the world to communicate with each other and share in one another’s lives. What a great thing!

If you have time, check it out! It has articles on a variety of topics, blogs, discussion boards, pictures, videos, and more. What a great opportunity for seniors who find themselves intimidated by the more popular social networking sites like MySpace, etc. Those sites are much different and represent a whole different generation.

Reverse Mortgage as Bridge Loan

November 1, 2007

House1In light of the current downturn in the real estate market, it has become apparent that reverse mortgages are being used more and more as bridge loans for seniors. It is an interesting concept, and one that will likely continue to grow. Since houses are taking longer and longer to sell, from 6 months to a year in different areas around the country, it may make sense for a senior homeowner to wait until the market comes back, then sell at a more reasonable sales price.

The likely scenario would be that there is a need for immediate cash and an unwillingness to sell at a low price. The loan, likely to be a proprietary reverse mortgage (though still non-recourse), would make most sense as the closing costs are much less for proprietary products. Though one could make an argument to do a HECM (FHA) if sale prices are super low. Rates on a propreitary reverse mortgage range from mid- 7% to mid-8%. For a bridge loan (short term), that is not bad.