Here is another good case study showing how reverse mortgages can be used for more than just supplimental retirement income. This case study illustrates how a reverse mortgage can help with long term care expenses.
Long Term Care Reverse Mortgage Case Study
A 65 year old couple is concerned that they have not saved enough money to cover long term care expenses and excessive medical costs. Their investment properties and pension provide a comfortable level of income today, but they are worried it may fall short in the future.
Their assets include a highly appreciated $2.2 million waterfront property with a detached rental cottage. If they sell the property outright they will lose $275,000 to capital gains taxes.
One solution is for them to take out a reverse mortgage against their property. They would recieve $800,000 line of credit from the reverse mortgage. They could then use part of the line of credit to purchase a SPIA (Single premium immediate annuity) and use the annuity payments to pay the monthly premiums on a long term care policy. The remaining portion of the reverse mortgage line of credit can be used to cover future medical expenses.
As the property appreciates in value of time, it's possible for the appreciation to far exceed the withdraws that are used to cover their future medical expenses. After 25 years (age 90 for the retirees) the balance on their reverse mortgage will be between $2 and 3$ million depending on the fequency and timing of their line of credit withdraws. If their home continues to appreciated at 6% over the same 25 years, it will grow in value to over $8.8 million.
This would provide their heirs with a significant estate at the same time providing the security and liquidity that the couple feels they need to pay for future health care and other expenses.
Resource box: For more information visit reverse annuity mortages or the reverse annuity mortgage blog.
Tuesday, February 10, 2015
Thursday, February 5, 2015
Using Real Estate to Pay for Retirement
Have you wondered how you are going to pay for your retirment? Well a new book "Retire on the House" by Gillete Edmunds and Jim Keene may open your eyes to new possibilities. If your like most homeowners, you only think of your home as a place to live and not as a powerful financial tool.
In the book the authors discuss almost every possible way to turn your home into a an income stream without selling it. The suggestions provided will give retirees who own their home many different ideas to suppliment their retirement income.
Some of the suggestions include converting your home into a boarding or rental house, refinancing your home, downsizing, moving to senior community and investing sell proceeds, or taking out a reverse mortgage.
The book does an excellent job of explaining the pros and cons of each alternative, especially its discussion on the complex subject of reverse mortgages. The authors present an easy to understand overview of the pros and cons of using a reverse mortgage.
Although this book tackles some complicated topics like reverse mortgages and can get a little heavy, the information provide is absolutely invaluable. Any Senior that owns their own homes should pick up a copy and study it, if only just to open their eyes to the possibities.
Information brought to you by the Reverse Mortgage Guide and the Reverse Annuity Mortgage Blog.
In the book the authors discuss almost every possible way to turn your home into a an income stream without selling it. The suggestions provided will give retirees who own their home many different ideas to suppliment their retirement income.
Some of the suggestions include converting your home into a boarding or rental house, refinancing your home, downsizing, moving to senior community and investing sell proceeds, or taking out a reverse mortgage.
The book does an excellent job of explaining the pros and cons of each alternative, especially its discussion on the complex subject of reverse mortgages. The authors present an easy to understand overview of the pros and cons of using a reverse mortgage.
Although this book tackles some complicated topics like reverse mortgages and can get a little heavy, the information provide is absolutely invaluable. Any Senior that owns their own homes should pick up a copy and study it, if only just to open their eyes to the possibities.
Information brought to you by the Reverse Mortgage Guide and the Reverse Annuity Mortgage Blog.
Monday, February 2, 2015
Reverse Mortgages on the Rise
The popularity of reverse mortgages in the U.S. seems to be exploding as more and more people begin to use their home equity to help fund retirement. Just take a look at these reverse mortgage statistics from HUD.
The U.S. Department of Housing and Urban Development endorsed a total of 7,572 reverse mortgages in June. And it has endorsed 55,659 reverse mortgages thru the nine months of FY 2006 ending June 30.
To put that in prospective the FHA endorsed only 43,131 reverse mortgage loans for all of FY 2005. In fact year-to-date totals represent a 83 percent increase over the 30,404 loans endorsed during the same period last year. That is impressive growth for any industry.
The U.S. Department of Housing and Urban Development endorsed a total of 7,572 reverse mortgages in June. And it has endorsed 55,659 reverse mortgages thru the nine months of FY 2006 ending June 30.
To put that in prospective the FHA endorsed only 43,131 reverse mortgage loans for all of FY 2005. In fact year-to-date totals represent a 83 percent increase over the 30,404 loans endorsed during the same period last year. That is impressive growth for any industry.
Sunday, February 1, 2015
Tuesday, January 20, 2015
General: Are HUD Reverse Mortages Good for Retirement?
Here is another article about reverse mortgages. This one talks specifically about FHA insured HUD reverse mortgages and their benefits.
Are HUD Reverse Mortgages Good for Retirement?
By Charles Kirkendall
HUD reverse mortgages can be a great tool for Seniors that are looking for additional sources of retirement funds. Through a HUD reverse mortgage, seniors can tap into the equity from their homes without having to make repayments. These funds can provide extra level of security and flexibility during their retirement.
HUD Reverse Mortgage Guidelines
The HUD reverse mortgage program spells out specific guidelines that are used to determine homeowner eligibility. Homeowners must meet the following criteria in order to be eligible for a HUD reverse mortgage:
The amount that can be borrowed on a HUD reverse mortgages is determined by the following criteria:
Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the home remains the borrowers primary residence. When the home is sold the Mortgage company recovers their principal, plus interest, and the remaining value of the home goes to the homeowner or to his or her survivors. Should the sales proceeds not cover the amount owed, HUD will pay the mortgage company for any shortfall.
The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage. Typically the mortgage company pays for this insurance and charges it to the borrower's principal balance. This FHA reverse mortgage insurance can make HUD's reverse mortgage program less expensive to borrowers than private programs without FHA insurance.
About the Author: Charles Kirkendall writes about reverse mortgages and other Senior financial issues. Visit reverse mortgage annuity for more information and resources.
Note: This article can be reprinted free of charge as long as it is reprinted in its entirety including the resource block at the bottom with all links enabled.
Are HUD Reverse Mortgages Good for Retirement?
By Charles Kirkendall
HUD reverse mortgages can be a great tool for Seniors that are looking for additional sources of retirement funds. Through a HUD reverse mortgage, seniors can tap into the equity from their homes without having to make repayments. These funds can provide extra level of security and flexibility during their retirement.
HUD Reverse Mortgage Guidelines
The HUD reverse mortgage program spells out specific guidelines that are used to determine homeowner eligibility. Homeowners must meet the following criteria in order to be eligible for a HUD reverse mortgage:
- Homeowner must be age 62 or older.
- The home must be owned free and clear or have a mortgage balances that can be paid from proceeds of the reverse mortgage.
- The home must be a principal residence.
- The property must be a single-family home, a one-to-four unit dwelling with one unit occupied by the applicant, a manufactured home (mobile home), or a unit in condominiums or Planned Unit Developments.
- The property must meet the minimum FHA property standards.
The amount that can be borrowed on a HUD reverse mortgages is determined by the following criteria:
- The borrower's age - The older the borrower the more that can be borrowed against the value of the home
- The loan interest rate - Obviously the lower the interest rate the more that can
be borrowed. - The home's value - There is no hard limit for home value to qualify for a HUD
reverse mortgage, but the amount that may be borrowed is capped by the maximum FHA mortgage limits for an area. This means that owners of a high priced home can't borrow any more than the owners of homes valued at the FHA limit.
Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the home remains the borrowers primary residence. When the home is sold the Mortgage company recovers their principal, plus interest, and the remaining value of the home goes to the homeowner or to his or her survivors. Should the sales proceeds not cover the amount owed, HUD will pay the mortgage company for any shortfall.
The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage. Typically the mortgage company pays for this insurance and charges it to the borrower's principal balance. This FHA reverse mortgage insurance can make HUD's reverse mortgage program less expensive to borrowers than private programs without FHA insurance.
About the Author: Charles Kirkendall writes about reverse mortgages and other Senior financial issues. Visit reverse mortgage annuity for more information and resources.
Note: This article can be reprinted free of charge as long as it is reprinted in its entirety including the resource block at the bottom with all links enabled.
Monday, January 5, 2015
Dealer Group Count Takes Stock of Reverse Mortgages
The Dealer Group Count has added reverse mortgages to its recommended product list. Speaking at the groups annual conference held in New Zealand this week, chief operating officer, Marianne Perkovic, discussed why reverse mortgages were added to the recommended product list.
According to Perkovic, the aging population and changing retirement landscape were the main drivers behind adding Reverse Mortgages to its recommented product list. "Due to strong consumer interest and a changing marketplace, we have chosen a panel of lenders with quality and cost-effective products. Count advisers will initially have access to ABN AMRO, Bluestone Equity Release and Macquarie Mortgages products. All of whom hold SEQUAL membership", she said.
For more information about Count visit their website at http://www.count.com.au/
Information brought to you by http://reverseannuity.blotspot.com and http://www.reverse.settle-today.com
According to Perkovic, the aging population and changing retirement landscape were the main drivers behind adding Reverse Mortgages to its recommented product list. "Due to strong consumer interest and a changing marketplace, we have chosen a panel of lenders with quality and cost-effective products. Count advisers will initially have access to ABN AMRO, Bluestone Equity Release and Macquarie Mortgages products. All of whom hold SEQUAL membership", she said.
For more information about Count visit their website at http://www.count.com.au/
Information brought to you by http://reverseannuity.blotspot.com and http://www.reverse.settle-today.com
Friday, January 2, 2015
House Passes National Reverse-Mortgage Loan Limit
Last month, the U.S. House of Representatives passed the Expanding American Homeownership Act of 2006 (H.R. 5121). This new bill would create a single national limit for the HECM (Home Equity Conversion Mortgage) program equal to the conforming Freddie Mac loan limit, which is $417,000 for 2006.
Under the current law, the location of the home dictates the maximum loan amount, which varies by county. These amounts range from $200,160 to $335,800. The new bill would set one national rate that would allow seniors to take out much larger reverse mortgage loans.
The Expanding American Homeownership Act also would provide other improvements to the FHA HECM program. The new legislation calls for a "home purchase" option that would allow people to use a reverse mortgage to purchase newer housing that better suits their needs (currently only Fannie Mae offers a reverse mortgage home purchase program.) It would also remove the current volume cap on the number of HECM loans that FHA can insure (currently at 250,000 loans.)
Reverse mortgages have already exploded in popularity over the last couple of years, but with the passage of this act, we could see even larger increases in the number of seniors utilizing this powerful program.
Under the current law, the location of the home dictates the maximum loan amount, which varies by county. These amounts range from $200,160 to $335,800. The new bill would set one national rate that would allow seniors to take out much larger reverse mortgage loans.
The Expanding American Homeownership Act also would provide other improvements to the FHA HECM program. The new legislation calls for a "home purchase" option that would allow people to use a reverse mortgage to purchase newer housing that better suits their needs (currently only Fannie Mae offers a reverse mortgage home purchase program.) It would also remove the current volume cap on the number of HECM loans that FHA can insure (currently at 250,000 loans.)
Reverse mortgages have already exploded in popularity over the last couple of years, but with the passage of this act, we could see even larger increases in the number of seniors utilizing this powerful program.
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