Did you know the average reverse mortgage borrower is not in financial distress? Rather, the typical person doing a reverse mortgage is the retiring boomer who watched a parent’s financial situation later in life and is determined to avoid a financial crunch down the road. And did you know there are two “flavors” of reverse mortgage, a refinance and a purchase? Typically, the homeowner doing a reverse mortgage refinance is the baby boomer putting together a long-range financial plan. The homebuyer using a reverse for purchase is looking to buy a home without pinning down a huge chunk of cash or taking on a new 30-year mortgage during retirement. A reverse mortgage is not mysterious, nor exotic, nor any more complex than any other loan. It is simply…
Middleburg Reverse Lady
Posts from the “Retirement Planning” Category
Can a reverse mortgage create a financial safety net?
middleburgreverselady
Posted on February 12, 2018
Laurie MacNaughton © 2018 Can a reverse mortgage create a financial safety net in retirement? In a word, yes. This morning I received a call from a wealth manager who led off by saying he wasn’t “that familiar with reverse mortgages.” He specifically wanted to know whether a reverse mortgage could offer retirement-aged clients a measure of security during market fluctuations. Here was my answer: the most familiar “flavor” of reverse mortgage is the line of credit. It’s an equity line that is repaid when the last person on title permanently vacates the home. Once the home is no longer the primary residence, typically it is sold and the loan is repaid; the homeowner, heirs, or estate get the remaining equity. End of story.…
Laurie MacNaughton © 2018 If you’re even a casual market observer, Monday’s financial news grabbed your attention as the Dow plunged 1175 points, the biggest point drop in history. As a result of the market turbulence, the first call I took Tuesday went like this: “In light of the market crash, should I do a reverse mortgage?” So…a couple things here. First, and perhaps most importantly, a loan officer is not the same thing as a financial planner, wealth manager, nor accountant; most loan officers are neither estate attorneys nor CPAs. Even if your particular loan officer does carry one or more of these designations, he or she should not be dispensing advice across disciplines, as conflicts of interest might quickly become an issue.…
Laurie MacNaughton © 2018 “My mother’s home was paid off, and at the time we thought a home equity line was going to be the best way for her to pay medical bills. But at this point the payment is crushing her – and she has new medical bills coming in. Looking back, what we really needed was a crystal ball.” Truth is, a crystal ball would come in handy in much of life. It’s just that more is at stake when we’re dealing with our aging parents. No honest lender is ever going to tell you a reverse mortgage is a universally good fit: there are older homeowners for whom the time has come to sell their home and transition into other housing. Some…
Laurie MacNaughton © 2018 Reverse mortgages…you’ve seen the ads a hundred times. But odds are you have a lot of questions. In a nutshell, here’s the scoop The first thing to know is a reverse mortgage is an FHA-insured home loan. I always start with this point simply because there can be confusion about the fact this is a home loan, in many ways not unlike any other loan we’ve all grown up with. Here’s where the difference comes in: a reverse mortgage loan is repaid when the last person on title permanently leaves the home. In fact, the very name itself comes from the fact the loan is repaid in reverse on the back-end, rather than being repaid monthly. The second thing to…
By Laurie MacNaughton [NMLS ID #506562], as first published in Reverse Review, Oct 2017 edition. Reprinted with permission. To be honest, the seminar topic was probate. But the two opening questions took my thoughts far afield. “How many here want to leave their kids an inheritance?” Nearly every hand went up. “How many here are likely to have an inheritance to leave?” Not as many hands went up. In fact, not many hands went up, period. I sat through the Circuit Court judge’s talk scribbling down my churning thoughts, the foremost of which was this: not leaving kids an inheritance is one thing; having your kids bankroll you as you age is another thing altogether. If you’re the adult child of aging parents, zero inheritance can look great…
Laurie MacNaughton [NMLS ID#506562] © 2017 I am not an alarmist. I do, however, believe forewarned is forearmed. This week FHA announced some of the most sweeping changes ever made to its reverse mortgage program: starting October 2, 2017 FHA’s reverse mortgage loan amounts will decrease, and most new reverse mortgage applicants will see higher upfront FHA mortgage insurance. What does this mean? First and foremost it means that if your client, friend, or family member is looking into a reverse mortgage, now is the time to consider moving forward. Though it will likely take years to assess the true impact of this week’s announcement, this much is apparent now: if a homeowner just barely qualifies under current guidelines, he or she may be ineligible under the new…
