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Cosimo Galluzzi
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"I'm Dorothy Gale from Kansas"
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trying on a metaphor
occasionally subtle
will byers stan first human second
Today's Document
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@oregonreversepro-blog
2016 National HECM Endorsements - Statistics / Infographic
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See HECM endorsements by state, average interest rates, fixed vs. variable rate, how the HECM was used in 2016, endorsements by month and more.
2016 Oregon HECM Endorsements - Statistics / Infographic
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2016 Oregon HECM endorsement data including how the HECM was used, average interest rates, HECM usage by county, top 20 cities and more.
Getting Ready To Retire in Oregon? How A Reverse Mortgage Can Help
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I originally met with Tim (not his real name), age 64, in late 2015. He was curious about reverse mortgages; how they worked and if they might work for his situation. Tim was self-employed and wanted to start working less, but at the same time he wanted to delay claiming his social security. We did …
Are Seniors Paying Cash For A Home In Oregon Making The Right Move?
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As an Oregon Senior, should you pay cash for a home? Is that really the best move financially? It may sound like the right way to go, but it may not be the right choice.
Looming Problems For Senior Housing in Oregon
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Seniors in Oregon will face a variety of housing issues. Planning now can help people be better prepared when faced with these issues. A reverse mortgage may be a solution.
Get A Reverse Mortgage In Oregon - Even With A Bankruptcy
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You can get a reverse mortgage in Oregon even if you have a bankruptcy. If you are currently in a chapter 13, a reverse mortgage could pay it off.
Utilize $100,000 Sitting in Your Savings With A Reverse Mortgage?
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Thinking about getting a reverse mortgage in Oregon? Here is how one of my clients utilized money in their savings account to get a nice return on their reverse mortgage.
Losing a Spouse That Controls the Checkbook Along With Half the Household Income
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Ann (not her real name) is 81 years old. She lost her husband late last year. Throughout their entire marriage Ann never paid bills, never made any of the financial decisions and for the most part was unaware of what was happening financially in the household. Luckily, her daughter and son in law lived nearby …
Using A Reverse Mortgage Wisely
This month’s scenario is on Rick and Darcy, both in their mid-sixties. They are pretty well off financially. They owned their $600K home free and clear, have several hundred thousand in retirement and bank accounts. And to top it all off, they also have a pretty nice monthly income.
These are not the typical clients I meet with; however, I am starting to see more and more people like Rick and Darcy. They are part of a growing group of savvy seniors who view the reverse mortgage as a financial tool instead of a last resort.
They called me about a reverse mortgage to see how it could help them accomplish what they wanted to do with their lives for the next 10 to 15 years. They wanted to spend their liquid assets over the next 10 to 15 years and then utilize the reverse mortgage after their liquid assets were exhausted. This is the complete opposite of what most people do, which is spend their liquid assets first and then get a reverse mortgage last.
They wanted to help their kids buy homes and start businesses, and they wanted to travel more. I don’t know about you, but I would rather enjoy the experience of giving to my family while I am still alive. And I would like to travel while I am still physically able to do so.
Based on their age, value of their home and the fact they owned it free and clear, they qualified for a $331,258 line of credit. One of the really cool features of the line of credit is that the unused portion of the line of credit grows at the current interest, rate plus 1.25%.
Because of this growth rate and assuming they do not use it; their line of credit availability is expected to grow to $582,059 in 10 years and $771,556 in 15 years.* I say expected because this is a variable rate loan and future growth is determined by future rates. If interest rates rise, they are going to have an even larger line of credit available.
Now, if they had waited until they exhausted their liquid assets to get a reverse mortgage, which is what most people do, the numbers would be drastically different.
Assuming current interest rates, loan limits, fees and product guidelines and they waited until they were 75 or 80 years old to get a reverse mortgage:
Their initial line of credit would be $377,632** when they are 75, a potential difference of $204,427.
Their initial line of credit would be $404,707** when they are 80, a potential difference of $366,849.
Those numbers clearly show why waiting to get a reverse mortgage until you need one is usually the wrong way to utilize a reverse mortgage. In most cases, it makes sense to get a reverse mortgage early on in retirement.
This scenario also explains why you should consider getting a reverse mortgage even if you do not have the need for one. The reverse mortgage line of credit creates liquidity in the home, an additional layer of financial security and a growing source of funds for future needs.
The line of credit is open ended. This means that even if Rick and Darcy used funds from the line of credit, any payments they make towards the line of credit are then available for future use.
* Initial interest rate and APR of 4.332%. Expected rate of 4.4%. Growth of line of credit calculated at expected rate plus 1.25%, 4.4% + 1.25% = 5.65% growth rate as of 11/1/2016. Based on max claim amount of $625,500 and youngest borrowers age of 66 at time of loan.
** As of 2017 max claim amount is $636,150.
Oregon Reverse Mortgage Scenario Of The Month
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Going Above and Beyond and Blazing New Trails In The Reverse Mortgage Market Margie only has $624 a month in social security income and no other liquid assets. She got her reverse mortgage loan 6 years ago, 2010 for those that don’t want to do the math. Her loan was structured as term payments where …
Increase Your Monthly Cash Flow With A Reverse Mortgage in Oregon
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According to the Social Security Administration, as of December 2014, the average retired worker drew $1,329 in monthly benefits. If two spouses collected the average monthly benefit, their household income from Social Security would come to about $32,000 — far below the median U.S. household income of about $52,000. If you need or want to …
Oregon Couple Recovers 71% Of Their Monthly Income
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Don and Darla were referred to me by a local bank here in Medford when they inquired about a reverse mortgage. Our first meeting lasted 2 hours. Our second meeting lasted 2 hours. Our third meeting lasted 2 hours. We had a total of 5 meetings, at 2 hours each, for a total of 10 …
Fried Eggs and Reverse Mortgages
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To say that the reverse mortgage is misunderstood is a massive understatement. The American College of Financial Services polled 1,000 people between the ages of 55 and 75 with at least $100,000 in investable assets and $100,000 in home equity. Survey respondents were asked 10 questions on how a reverse mortgage works, only 30 percent …
Getting A Reverse Mortgage With Divorce In Oregon
Did you know that divorce rates in the United States are actually on the decline? There is an exception to this and that is divorce rates among seniors. From 1990 to 2013 divorce rates among those 50 and older has doubled, according to research from Bowling Green State University.
Besides deciding on how to split assets, senior divorce can bring other issues such as strained finances and health problems. But it can also place larger burdens on adult children and government resources.
The most common result I see is one spouse keeps the house and the other keeps the liquid assets. In every one of these situations I am working with the spouse that kept the house. More often than not they either need access to equity to maintain the home, they need additional monthly income or they just need to get rid of the mortgage payment.
This month’s scenario is no different. The spouse keeping the home needed to get rid of the mortgage payment.
Donna gave me a call to see if a reverse mortgage was even possible. She and Frank were getting a divorce and she wanted to make sure Frank would be able to stay in the home. A few days later I met with Donna and Frank to run numbers and make sure it would work.
Because they had not filed divorce yet, they had two options. Start the process with Donna as a non-borrowing spouse or file for divorce and proceed with just Frank. They opted to file for divorce. Amazingly the divorce was finalized just 2 weeks later and I began the process with Frank.
Frank’s income between Social Security and his pension was only $2468 a month. His mortgage payment including taxes and insurance was $1366. Over 55% of his gross income was going out towards the mortgage payment.
By doing the reverse mortgage we were able to get his mortgage paid off and also get him a line of credit of $14,219. Taxes and insurance are only $278.87 a month. In other words we were able to free up $1088 of monthly income for Frank, plus give him access to a reserve fund.
Who Do You Know? Who do you know that is 62 or older and thinking about getting a divorce, is currently going through a divorce or has recently been divorced? Send them my way to discuss how a reverse mortgage could have a massive impact on their lives for the better.
Did You Know? Did you know that I can do reverse mortgages on manufactured homes on land? The home has to have been built on or after July of 1976.
Need Content? Do you need or want content for your blog? Give me a call or send me an email about what you would like your blog post to be about in regards to reverse mortgages.
Getting A Reverse Mortgage in Medford - Just Because You Can
Jim (74) and Gina (78) (not their real names), were pretty well off. Between the two of them their retirement income was a little over $5,000 a month. They had some savings, but no real liquid retirement accounts. They were significantly better off financially than most of the clients I work with. They didn’t have to get a reverse mortgage, but they got one anyway.
So why did they do it? They wanted to get all of their debts, including their forward mortgage, paid off and travel across the nation in their 5th wheel. Getting the debts paid off increased their monthly cash flow almost $1500 and they didn’t need to worry about making payments. They could just go, have fun and not worry about bills. Not to mention that $1500 buys a lot of gas and some of the RV parks they stay at can be $200+ a night. Yes, $200+ a night for an RV park, I was just as shocked you are right now.
Makes sense right? It did to me too. But I pressed a little harder. They felt that it just made sense to do it. They had worked hard all their lives and they wanted to enjoy their retirement to the fullest, an extra $1500 a month meant more they could do and more places they could see. They also shared that neither of their parents left them anything and didn’t feel obligated to leave their kids anything either. “Our kids are doing just fine financially and don’t need anything from us” they said.
Some of you reading this are conservatives and are thinking it is irresponsible to use a reverse mortgage this way and that they should have just paid down the debts and the home loan so that they could have equity in the future, “just in case”. Conservatives have the attitude of wanting to play it safe, you earned it and you have to protect it because you never know what is going to happen.
Some of you reading this are free spirits and are thinking “heck yeah baby!” that’s the way you do it. And have the attitude of you worked hard, you earned it, you can’t take it with you and spend ‘em if you got ‘em, because you never know what is going to happen.
The reality is that both the conservatives and the free spirits are right. There is really no wrong or right decision to this month’s scenario. It all boils down to what people want to do and what makes sense to them. If it was me and my wife in the above scenario, I could see a major battle breaking out since my wife is the conservative and I am the free spirit.
Good To Know: This month’s good to know has nothing to do with the above scenario but thought I would share as I just ran into this scenario. Tax liens can be paid off through proceeds of the loan. Judgements can be paid off through proceeds of the home if there is a lien against the property, but must be paid off prior to close of escrow if there is not a lien against the property. Gotta love government underwriting guidelines, LOL.
Do you know someone that can’t make up their mind on whether they should get a reverse mortgage or not? The proposals I provide to potential clients are awesome. They include FAQ’s, charts, comparisons, explanations of fees, amortization tables and more. They have everything the conservative or free spirit wants and needs to know to make a decision.
Need a Speaker or Want a Class? I love teaching and speaking. I can present for as little as 10 minutes all the way up to 2 hours about reverse mortgages. I can offer CE credit for real estate or insurance agents as long as the class is through an association or non-profit. If you need a speaker or a class, just give me a call.
Don’t Forget! Check out my column in the “Oregon Senior News” paper. You can find the paper online or at local restaurants and grocery stores.
This blog post was originally posted on OregonReversePro - You can go here to read the original and other interesting scenarios with a reverse mortgage.
Susan Buys A Home in Medford Oregon Using A Reverse Mortgage
Going From Living In an RV to Owning A Home In Medford Oregon - Using A Reverse Mortgage To Purchase A Home
Susan (not her real name), 70 years young, spent the last couple of years living with friends or in an RV park. That was, until just a couple of months ago when she bought a home using a reverse mortgage. A little over 2 years ago, Susan and her ex started to go through a divorce. As soon as that process began, her husband moved out and stopped making the payments on the home. Her husband had always been the bread winner and she had always been the homemaker. Susan tried her best to make the payments but could not earn enough to cover them and pay for the rest of the necessities in life. During this time her mother passed away and she inherited some money. She worked with her lender to see if a loan modification was possible. She was denied, because even if she paid the mortgage down with her inheritance, she still did not qualify for the monthly payments. It was at this point that she enlisted the help of a real estate agent to sell her home. It took a while, but she was eventually able sell the home through a short sale. After almost two years of not having a “home” and unable to afford rent, she decided it was time to buy a home with the money she had inherited. Her first stop was to a hard money lender. She qualified for the loan but was uncomfortable with the monthly payment. She was then referred to another local lender who told her she could not qualify for a reverse mortgage because it had not been three years since the short sale. If it were not for Susan’s unwillingness to give up, she may have still been living in her RV today. Somehow she stumbled across me online. She gave me a call and told me about her situation. Since I specialize in reverse mortgages, I knew that she could qualify for a new loan because she only needed to be 2 years out of the short sale to qualify. Per FHA guidelines, I could not even take the application until a full 2 years had passes since the short sale, so we had to wait two months before we could even start the process. In the meantime, she somehow found a seller that was willing to accept her offer and wait for her to be able to qualify. Ironically, the seller had a reverse mortgage on his home, which is the only reason I could imagine him waiting. But apparently, according to the real estate agents, he just liked her. The agents thought there might have been a love connection brewing. But, hey, I am not one to gossip. Susan now owns a nice little house which is about 8 times the living space of her RV, a yard, washer and dryer, full size refrigerator, dishwasher and all the other creature comforts she had been without for so long. All she has to pay are her taxes and insurance which are cheaper than what she was paying on space rent for her RV.
Reverse Mortgage Scenario - They Bought Their Dream Home
This was originally posted here.
Jim (63) and Judy (65) (not their real names) own a home in Medford, but they have always dreamed of owning an ocean view home on the Oregon coast. There was not enough equity in their home to purchase their dream home and neither wanted to continue working in order to purchase it.
Jim had recently been awarded a significant amount of money through a class action medical lawsuit. They could have easily paid cash for their home, but most of the money would have been tied up in the home’s equity.
Jim has a long history in the real estate industry and was aware of using a reverse mortgage to purchase a home. Unfortunately, he was referred to someone that does not specialize in reverse mortgages. After three months of getting the run around and no answers, he was referred to me by his real estate agent. Not to brag, but I had an answer for him in just a few days.
Scenario: $385,000 purchase price Down Payment + Closing Costs: $192,717 Retains: $192,283 in cash No monthly payments – just pays taxes, insurance and upkeep of the home.
This was kind of a tricky scenario. There were Federal tax liens (due to poor advice from a CPA), bankruptcies and a loan modification(due to medical issues). Fortunately, the tax liens were satisfied with proceeds from the lawsuit and we were able to overcome the bankruptcy and loan modification with letters of explanation and medical records. Had we not been able to overcome this, they would have been required to set up a lifetime escrow account which would have been about $57,000.
Because they were not required to set up a lifetime escrow account, Jim was able to pay cash for a new truck and Judy was able to pay cash for a new car. Jim told me the interest from investing the rest of the cash will pay the taxes and insurance, freeing up an additional $319 a month in cash flow.
Using a reverse mortgage has put Jim and Judy in a much better financial situation than if they had just paid cash for the home. They now own two new cars free and clear, they have a nice chunk of money sitting in a retirement account that was not there before, the interest from these investments will pay for their taxes and insurance and they now own their dream home on the coast.
Are you or do you know someone that is 62 or older that is talking about buying a new home in Oregon?
Have them talk with me. I am happy to run scenarios, answer questions and educate people about using a reverse mortgage and how it can help them buy a new home Oregon.
Remember, I specialize in reverse mortgages; they are all I do.
I also have a special report I wrote titled:
“How To Buy A Home With 50% Down Or Less and Never Make A Monthly Mortgage Payment”
If you would like a copy just give me a call or shoot me an email and I will send it over. It is only about 10 pages, but lays out the basics of a reverse mortgage and several scenarios as to why people would want to consider this loan option.