Elder Care Expert Advice » reverse mortgage

Reverse Mortgages to the Rescue for Indianapolis Seniors

carlottakatra — Wed, 10 Jun 2009 03:15:37 +0000

Here are some TRUE stories about how a reverse mortgage saved a home for some seniors.

Tax Free Money To Help Seniors

carlottakatra — Thu, 12 Mar 2009 14:27:00 +0000

When a senior, over 62 years old, takes out a reverse mortgage, he or she has several options with regard to how to take the proceeds. First of all, reverse mortgage proceeds are tax free! For many seniors this is a huge benefit, especially if they are now taking out taxable funds from 401K /IRA accounts.

The first option for taking funds is to take monthly income for as long as the senior lives in the property. A check can be sent each month, or it can be direct deposited into their checking account for convenience. The amount they can take will vary depending on age and property value and equity. Your reverse mortgage lender can also set up monthly income for a specific time frame. Let’s say the senior has a piece of property they will be selling in a few years. The senior can take more monthly income for a shorter period of time knowing they will have more income later.

The second option for taking funds is to take them as a lump sum. The senior should be very cautious that they put these funds into something safe. There are horror stories about seniors taking out a reverse mortgage and then investing in some kind of annuity which ties up their money and they don’t have it when they need it. Remember, even though the lump sum is tax free, any interest earned on that lump sum, could be taxable.

The third option is actually the most popular. This is to take the money in the form of a line of credit. The senior can take out funds whenever they need them , say for property taxes, or a home repair and the rest of the money that stays in the line of credit actually grows tax free! This way, the senior benefits from the growth on the money they are not using.

The last option is to combine these other options. For example, I have a customer who elected to take some of her money upfront and the rest as monthly income. I have other customers who take the line of credit but take some as an upfront lump sum.

Which option is right for you? Every situation is different. Discuss all these options with your reverse mortgage specialist. Make sure you chose the option that works best for your situation.

Brenda Wheeler, Reverse Mortgage Specialist, M & I Bank Indianapolis

Stimulus Package Helps Seniors

carlottakatra — Thu, 12 Mar 2009 14:17:00 +0000

Everyone wants to know what the “stimulus bill” has in it for them. Well, thanks to that bill, there is at least one good thing for anyone considering a reverse mortgage. The maximum loan amount for a reverse mortgage has been increased from $417,000 to $625,500. While this may not thrill everyone, there are many seniors who have enjoyed more expense homes but were kept out of the reverse mortgage option due to low loan limits. I speak to seniors every week and many of them were pretty well off in their retirement, however, with the stock market plummeting and their CD rates down around 2%, they find themselves looking for options to finance their retirement. On top of that, with the possibility of GM and Chrysler going into bankruptcy, retired auto workers are looking at a possible reduction in their incomes or benefits. If you would have asked these folks a year ago, no one ever dreamed there might be an issue with their retirement.

Let’s look at an example: A couple who are 75 and 73 respectively who live in a home valued at $550,000. Under the old rules, that couple could have received $275,000 in tax free reverse mortgage proceeds (after all expenses were paid). Now, with the new limit, they can receive $360,872 in benefits. This is an increase of over $85,000.

Maybe it’s time to contact your Reverse Mortgage Specialist and get a free-no obligation quote to see what you might be eligible to receive. Everyone’s situation is different so it’s best to get the facts based on your scenario. Reverse Mortgages are available to any senior over 62 who has sufficient equity and who lives in their own home. There is no income or credit score requirement to qualify. It’s your money – make it work for you !

Brenda Wheeler, Reverse Mortgage Specialist, M & I Bank Indianapolis

Five Reasons You Won't Take A Reverse Mortgage, but you should

carlottakatra — Wed, 12 Nov 2008 14:09:00 +0000

1. “I want to leave my house to my children.”
Let’s first find out if your children WANT your house! Many families today live in different
states and they already have a home. Most children of seniors that I talk to want their
parents to be more financially secure and they couldn’t care less about getting the house
later. Talk to your family to see how they really feel. Also, remember that any equity left can
still go to your children. You can also look into insurance policies that may give your children
cash instead of a house ! Or you may be able to use some of the Reverse Mortgage proceeds
as a gift to your children so you can see them enjoy the money while you are here.

2. The Bank will take my house and my equity.
This is simply NOT TRUE ! The senior will keep the title to their property and may sell
their home at any time. When the loan is paid off, any equity left will go back to the senior
or to their estate.

3. The closing costs are too high.
Well, compared to what? If you were to get an FHA first mortgage on your home, the
closing costs would be very similar to the Reverse Mortgage.
If you compare to a line of credit (which is harder to qualify for) then the closing costs would
be less on the line of credit, but you would still need to make payments on the line and the
line doesn’t grow. Many seniors start out with a line of credit but get tired of making
payments and paying higher interest, so they end up with a Reverse Mortgage anyway.
The Reverse Mortgage line of credit is tax free and the growth on the unused portion also
grows tax free (around 3.5% these days) plus you NEVER have to make a payment.

4. I will have to pay back more than I borrowed.
Yes, this is true, however, this is true of any mortgage. On a “traditional ” first mortgage, if
you borrow $100,000 at 7% rate and pay on that money for 30 years, you actually pay back
OVER $250,000 !! The difference is that on a Reverse Mortgage, you won’t be making
payments on the loan during the time you have use of the money. In addition, you can live in
your home for as long as you wish and you can never owe more than the property is worth.

5. ” If I wait, I can borrower more later because I will be older.”
While it’s true that as you age, you are eligible for higher loan amounts, this is also based on
your equity/value of your home. Your home may not have appreciated enough in the next
year or two to offset the difference. In addition, rates have dropped which also allows you
to get more cash. Rates may be higher later. The most important thing to think of is that
none of us knows what tomorrow will bring and perhaps you will be able to use the money
sooner, rather than later?

The best decision you can make is one that considers all the facts.

Brenda Wheeler, Reverse Mortgage Specialist, M & I Bank Indianapolis

The HELOC Blues

carlottakatra — Thu, 09 Oct 2008 19:08:00 +0000

Many seniors today are singing the “HELOC BLUES” because of the tightening of credit by most banks. It was always more difficult for seniors to qualify for an equity line due to lower income and lack of credit history. However, today it’s even more difficult as all banks have tightened their lending guidelines for home equity lines of credit. The advantage of the HELOC is the low (or sometimes non-existent) closing costs. The disadvantage is that once the money is taken from their line of credit, the senior has to make payments on the loan.

The answer to the HELOC Blues is the Reverse Mortgage ! One of the ways to take out funds from a Reverse Mortgage is to take the money in the form of a credit line. Unlike a HELOC, the senior does not need a certain credit score or certain income to qualify. The senior only accumulates interest on the amount that they draw to use (remember there is never a payment on the Reverse Mortgage). The money that the senior is not using actually grows at an annual rate of approximately 4% (rates change without notice). This growth is TAX FREE !

According to AARP, this is the most popular way to take Reverse Mortgage funds. This gives the senior more control over when and how much of their equity they want to spend. The senior keeps the title to their house and the senior will keep any equity left after the loan is paid off. The loan is not due until the senior permanently vacates the property.
Talk to a Reverse Mortgage Specialist. This may be your new song to sing and it won’t be the blues !

Brenda Wheeler, Reverse Mortgage Specialist, M & I Bank

Chapter 13, The Miller Story

carlottakatra — Sun, 05 Oct 2008 20:22:00 +0000

Mr. and Mrs. Miller (not their real name) had been paying off a Chapter 13 Bankruptcy for several years. They paid $122 per month on their bankruptcy payment plan. They were able to retain their house and had a mortgage payment of $1000 per month. The payments were hard for them as they only had Social Security and a small pension every month. One day, while waiting in line at their M&I Bank branch, Mr. Miller saw a poster advertising Reverse Mortgages. He made an appointment with me to go over that program. I was concerned that we handle their bankruptcy carefully, so with his permission, I spoke to his attorney about our proposed Reverse Mortgage plan. We also spoke to a representative of the court. I sent them some information and the court agreed to let Mr. and Mrs. Miller do this loan. I got that permission in writing and we agreed to fax over their HUD 1 (closing document) as soon as the loan closed. The court gave us 30 days to close the loan ..we did it in 27 days ! Mr. and Mrs. Miller not only got completely out of monthly payment debt with their Reverse Mortgage but also got a little over $3000 at closing. Now they have additional income of $1122 per month (from not having to pay a mortgage payment or a BK payment) and they have a little cushion for emergencies. They are so relieved. They can live in their home for the rest of their lives and never make a payment. They kept the title to their home and any equity left will go to their children.

Brenda Wheeler, M & I Bank Reverse Mortgage Specialist