Weekly Scenario

Steven E. Shane, Esq. | © 2014 Offit Kurman, Attorneys At Law | Used by permission                                

Question:  My son lives across the country but is my health care agent.  He has a copy of my advance medical directive.  I’m concerned that if I am admitted to the hospital suddenly, or there is a medical crisis, he may not be able to quickly deal with the situation.

Answer:  An advance medical directive gives instructions as to the type of medical care you would like to receive in the event you cannot express those wishes yourself.  The document can also give another person the ability to make medical decisions for you.

The document, however, is not helpful if it is locked away at the bank or in your attorney’s office.  One solution [for dealing with this problem] is with a new app called “My Health Care Wishes.” This app allows one to import and store important health care documents on a smartphone so they are accessible when needed.

So in this scenario, your son could keep the information on his smartphone.  If there were an emergency, you would have a “My Health Care Wishes” wallet card stating your son has your medical proxy documents.  He would access and send that document quickly, and then have the authority to speak with the medical facility and make decisions.

Two other apps available are DocuBank and MyDirectives.  I have also seen articles which advise using a phone or tablet to simply store documents in a cloud-based storage system.

Comment:  One issue to be wary of is the security of these legal documents.  My hope is that these apps have worked on the security issues, but I can’t comment on whether that has actually taken place.

As always, if you have any questions or would like to learn more, please let me know.

Steven E. Shane                                            
Principal Attorney                                              

Offit│Kurman^®

Attorneys At Law

www.offitkurman.com
8171 Maple Lawn Blvd. | Suite 200 | Maple Lawn, MD 20759 | 301.575.0300

 

Please note the above material discussed is intended to provide only general information.  Do not, under any circumstances, solely rely on this information as legal advice. Legal matters are often complicated.  For assistance with your specific legal problem or inquiry please contact me directly.

Low Interest Rates, Low Inventory, and a Slow Market? Huh?

Laurie MacNaughton [NMLS# 506562]

Low interest rates, low housing inventory, and a slow housing market? In what kind of crazy world do these three conditions exist simultaneously?

At last week’s 2014 Finance Summit, hosted by Northern Virginia Association of Realtors (NVAR), Joseph Minarik, research director for the Office of Management and Budget, explained how we got where we are.

According to Minarik, interest rates have been so very low for so very long most people who were going to refinance have done so. Additionally, some buyers moved up their home purchase to take advantage of historically low rates. So in effect, very low rates caused the market to borrow homebuyers from the future. Now rates have edged up slightly, and homeowners are loath to purchase a new home and forfeit their low rate. This not only impacts the sale of previously owned homes, but since fewer people are willing to move, it also impacts new home starts.

And how has this impacted the housing market? Basically since the middle of 2013, the pace of home purchases has been stalled. This includes new home starts.

But there was good news out this week: for the first time all year, April’s home sales were up.

Several factors have come together to create a better housing market, according to Steve Farbstein, Chairman of the Mortgage Executives Committee of Virginia Bankers Association. One such factor is the loosening of lending standards by some lenders. Additionally, certain loan products that had been unavailable have started to reappear, giving borrowers with unusual circumstances a better chance of qualifying.

Though a loosening of lending standards may help homebuyers who are in their working years, many senior homebuyers still cannot qualify for a traditional loan. Often this is not because they have adverse credit issues. Rather, it can be next to impossible to get a loan if the applicant is not actively employed.

But here’s the thing: it’s not that seniors are unemployed. They’re retired. But either way, in many cases they’re still not getting that loan – and as a reverse mortgage specialist, it’s the retired, or those who are planning to retire soon, I’m concerned about.

There actually is a purchase loan just for seniors. It’s called the HECM for Purchase loan, and it was designed specifically with seniors’ needs in mind. With the FHA HECM for Purchase there is a down payment, but there is never a monthly mortgage payment due. And, though guidelines will soon tighten, as of right now qualifying for a HECM for Purchase loan is based upon the borrower’s age and the purchase price of the home. Also, in many cases it’s ok if there is still an “exit” home that has not yet sold. This gives seniors time to make any necessary repairs or upgrades to the “exit” property after they have moved into their new home.

The housing market is starting to budge, and there is no reason seniors should be left behind. Now while rates are low it’s a great time for seniors to get into a home configured to suit their needs in retirement.

Give me a call and let’s talk. I always love hearing from you.

Laurie

Laurie MacNaughton[NMLS# 506562] is a freelance writer and a Reverse Mortgage Consultant at Middleburg Mortgage. She can be reached at: 703-477-1183 Direct, or Laurie@MiddleburgReverse.com

 

 

 

Weekly Scenario

Question:

My wife and I recently looked into doing a reverse mortgage, but were told we don’t qualify for enough to pay off our existing mortgage. Do we have any options?

Answer:

This situation is called “short to close,” and it refers to the exact scenario you are encountering, namely one in which your current “forward” mortgage is too large to be paid off by the proceeds from the reverse mortgage.

You do still have options. The most common solution is to bring money to closing to cover the shortfall.

Here’s an example in real numbers:

John and Dianne are each 64, and their plan is to retire within the next 6 months. Their home is appraised at $400,000, and they owe $203,000 on their current mortgage.

Assuming current interest rates and average closing costs, the amount they qualify for leaves them about $5,000 short of what they need in order to fully pay off their forward mortgage.

They are allowed to bring that $5,000 to closing in order to make the reverse mortgage work. The funds to cover the shortfall can come from any non-loan source, including savings, sale of an asset, or a gift from adult children.

And what is the benefit of doing this? The obvious benefit is that they have no more monthly mortgage payment. Since most Americans’ largest monthly expense is their mortgage payment, eliminating that expense frees up a significant amount of money on a monthly basis.

But there are side benefits as well, including safeguarding the home in the event one spouse dies and the surviving spouse loses the retirement income generated by the late spouse. Even with the loss of income, no payment on the loan is due until the last person on the home title moves, sells the home, or dies. At that point the heirs have up to one year to decide whether to sell or to refinance the home.

If you have reverse mortgage questions, give me a call. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS# 506562] is freelance writer and Reverse Mortgage Consultant with Middleburg Mortgage. She can be reached at 703-477-1183, Direct, or at Laurie@MiddleburgReverse.com

 

Middleburg Mortgage ∙ 8190 Stonewall Shops Square ∙ Gainesville, VA ∙ 703-477-1183 Direct Laurie@MiddleburgReverse.com ∙ www.MiddleburgReverseLady.com

 

Weekly Scenario: What Happens to the Home When we Move?

Scenario:

My wife and I want to work until we’re both 70, and then move to North Carolina. If we do a reverse mortgage now, what happens to the home when we move?

Answer:

Let’s put aside the concept of reverse mortgage for a moment and just think about a traditional mortgage, also called a “forward” mortgage.

What happens with a forward mortgage when you sell your home?

We all know the answer: your home sells, and when you go to settlement the forward mortgage is paid in full, and you pocket the difference between the sales price and the amount due on the mortgage.

With a reverse mortgage the formula is the same, and looks like this:

Sales Price of the Home – What’s Due on the Loan = What You Pocket

When you meet with your reverse mortgage specialist, one of the mandatory disclosures will be an amortization schedule showing approximately how much you can expect to realize from the sale of your home in any given year.

Just as with a forward mortgage, the sales price of the home will be a major factor in how much you pocket from the sale.

As a side note, when it’s time to buy your new home you can purchase it using a Reverse for Purchase loan, also called a HECM for Purchase. You will make a down payment of approximately 50% of the purchase price, and the Reverse for Purchase loan will make up the difference.

With HECM for Purchase you never have a monthly mortgage payment, which frees up your monthly income for other purposes. It also allows you to retain more cash from the sale of your previous home.

If you have questions either about a reverse mortgage on the home you’re in, or questions about HECM for Purchase, give me a call. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS# 506562] is freelance writer and Reverse Mortgage Consultant with Middleburg Mortgage. She can be reached at 703-477-1183, Direct, or at Laurie@MiddleburgReverse.com

 

Laurie MacNaughton ∙ Reverse Mortgage Consultant, President’s Club ∙ Middleburg Mortgage ∙ 8190 Stonewall Shops Square ∙ Gainesville, VA ∙ 703-477-1183 Direct ∙ Laurie@MiddleburgReverse.com ∙ www.MiddleburgReverseLady.com

 

 

 

Weekly Scenario – Reverse Mortgage and Divorce Settlements

I frequently find myself answering the same questions, so I have decided to begin a “Weekly Scenario” post. If you have a question, let me know and I’ll address it in a future “Weekly Scenario.”

Question:

I am going through a divorce and want to stay in the home where I raised my children. However, I don’t have enough money to pay off my ex-husband’s “portion of the marital share.” Can a reverse mortgage potentially help me?

Answer:

Yes. Here are some things to note:

1)    There are no restrictions on how you use the proceeds from a reverse mortgage. You may indeed use the proceeds to pay the portion of the marital share due your ex-husband.

2)    Under today’s guidelines, to make a reverse mortgage work the homeowner must have a minimum of approximately 50% equity in the home. However, depending upon the terms of your Property Settlement Agreement you might need to have a home that currently has a small outstanding “forward” (traditional) mortgage.

3)    Many family law attorneys are not familiar with the reverse mortgage program. It may be of benefit for you to ask your attorney to speak directly with your reverse mortgage loan officer.

If you have questions regarding reverse mortgage, give me a call or shoot me an email. I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage · 8190 Stonewall Shops Square · Gainesville, Virginia 20155 · 703-477-1183 Direct · Laurie@MiddleburgReverse.com

Visit me on Facebook at www.facebook.com/MiddleburgReverseMortgage

Licensed in: Maryland (MD), Washington, DC, Virginia (VA), Pennsylvania (PA), Delaware (DE), North Carolina (NC), South Carolina (SC), Georgia (GA), Tennessee (TN), Florida (FL)

 

 

Guilty as Charged

Laurie MacNaughton [506562]  © 2014

I could hear it in her voice, I could see it in her eyes – the fear, the sublimated guilt, the tears lurking just beneath her every word.

Her sin? Old age.

Her crime? The loss of her husband of 58 years. And, with his death went fully 50% of her household income.

And now a new challenge: she has suffered a stroke, and though her recovery is steady, it is slow, and the long-time family home is simply no longer appropriate.

I met with “Mrs. Jones” last night. Her darling middle-aged daughter joined us, and mentioned it was a realtor who had given them my name. After speaking with both mother and daughter it became clear just how good a call it was on the part of the realtor: Mrs. Jones needs out of this big house, and to get into a home appropriate to aging in place.

HECM for Purchase

HECM for Purchase (also known as Reverse for Purchase) is an FHA-insured home-purchase loan available to seniors aged 62 or older. The purchaser provides a down payment – often derived from the sale of the exit home – and the HECM for Purchase loan provides the rest of the purchase funds.

Punto. That’s is. That is the last mortgage payment the home buyer will make on that home until s/he permanently leaves the home. At that point the loan will be repaid from the proceeds of the sale, and the remaining equity will belong to the homeowner, or to the heirs.

Property taxes (if applicable), homeowners insurance, and routine upkeep of the home are still required.

Are you in a home too big, or with too much upkeep, or with too many stairs? Have your longtime neighbors moved, leaving you in a neighborhood you no longer recognize? Has traffic become such an ordeal you are afraid to leave your house?

Give me a call and let’s talk. Include your adult children on the conversation. And together, let’s explore your options. You may have far more than you know.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · Laurie@MiddleburgReverse.com

   Visit me on Facebook at www.facebook.com/MiddleburgReverseMortgage

Licensed in: Maryland (MD), Washington, DC, Virginia (VA), Pennsylvania (PA), Delaware (DE), North Carolina (NC), South Carolina (SC), Georgia (GA), Tennessee (TN).

You Thought it Couldn’t Happen – A New Home in Your Future

Laurie MacNaughton 11|2013

The numbers are compelling: according to the National Association of Realtors, last year over 26% of homes were sold to homebuyers over the age of 50. And as the peak bulge of the boomer generation approaches, this number is expected to rise dramatically until it makes up the largest homebuyer market in American history.

But here’s the thing: it’s this same cohort that has had the toughest time saving adequately for retirement. Many people automatically assume this group has been spendthrifty, careless about planning, poor at saving, in denial about aging, and overly optimistic about retirement costs. And to some extent this is true, especially if they are compared against their own parents, the highly thrifty members of the Greatest Generation.

However, there are many untold sides to this story. First, the boomer cohort was disproportionately hit by the Great Recession. Though fewer of those aged 50-62 lost their jobs than did 20-somethings, if laid off, older workers experienced a dramatically longer period of unemployment. As they are hired back, often it is for lower wages than they earned at their previous job. Further complicating their financials is that many in this group still have children at home – or in college.

But the really pricy bill comes due when boomers care for their aging parents. By the time most people are in their 60s, their parents are in their late 80s or early 90s. In many cases the parents long ago depleted their own savings and assets, and now look to their aging children for support. It is this multifaceted convergence of events that causes an almost unwinnable financial challenge.

So with this as a backdrop, a question I commonly get from aging boomers is, “Should we refinance the home we’re in, or should we buy something with less upkeep?”

Obviously I don’t know – but I do have quite a body of knowledge of what others have taken into consideration. Following is a starting point for things to consider:

1. Is your existing home safe, including layout and accessibility to bedrooms, bathrooms, kitchen and laundry?
2. Is the home the right configuration? How about size?
3. Are you able to keep up with the yard and the household maintenance?
4. Is the location still right, meaning are you close enough to family so they can check in on you?
5. Have traffic patterns gotten dangerous?
6. Are you close to doctors, shopping, amenities, recreation, and your house of worship?
7. Do you still know your neighbors?
8. Will this still be the right house in 10 years? How about in 15?

If you answer a significant number of these “no,” moving might be a logical consideration. However, for anyone who recently has applied for a home loan knows, lending laws and regulations have become akin to invasive surgery. And for those looking to retire, or who have already retired, securing a loan can be very, very difficult.

However, FHA’s seniors’-only HECM for Purchase was specifically designed with the retired – or soon to be retired – buyer in mind. While there are qualifications that must be met, they are not as stringent as those governing “forward” lending.

Another very beneficial element of HECM for Purchase is that you can buy your new home before you have sold your exit home. Not only does this get you into your new home in a timely fashion, but you now have time to market your exit home and wait for the next peak sales season to roll around before selling.

But perhaps best of all, rather than tying up a significant amount of your financial resources in the new house by doing an all-cash purchase, you bring to the table only a percentage of the purchase price, which allows you to keep liquid more of your savings, or more cash from the sale of your exit home.

If you have been thinking about moving and didn’t think it was a realistic possibility, give me a call and let’s talk. You may very well be delighted to learn you have a new home in your future.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com

Quittin’ time at 65 – Says who?

by Laurie MacNaughton, as published in Loudoun Times Mirror © 9/21/2013

It goes by many names: “bridge job,” “encore career,” “recareering,” or simply “delayed retirement.” But no matter what it’s called, the fact remains – as life expectancy edges ever higher, many of us can expect to live another quarter century after the traditional age of retirement.

As a consequence of rising longevity, increasing numbers of Americans are making the decision – some willingly, some less so – to switch jobs but continue working. In fact, more than one in three Americans now works past the traditional retirement age of 65.

And that number is expected to rise dramatically. According to a Gallup poll out in May, 75% of Americans plan to work until they are 70, or “as long as possible.” The reasons cited, however, are far more varied, and in some cases far more nuanced, than just the need for more income. In fact, respondents were evenly divided between those planning to work for financial reasons and those planning to work for self-fulfillment, to stay active, or to continue to contribute to their community.

These facts suggest an interesting question: is the prevailing idea of “old” itself old? Or, put another way, as a society are we operating under guidelines with obsolete assumptions and outdated definitions – ones that say 65 is quittin’ time?

In After the Recovery: Help Needed – The Coming Labor Shortage and How People in Encore Careers Can Help Solve It, noted economist Barry Bluestone states that precisely the areas projected to be most in demand in the coming years represent the most common encore careers: teaching, health services, faith organizations, government, and non-profits.

There are other interesting trends as well: older Americans overwhelmingly represent business startups, with the Small Business Administration reporting that more than five million Americans over the age of 55 are either business owners or self-employed. Furthermore, twice as many high-tech startup companies are established by those aged 55 and older than by those in their 20s or 30s.

A visit to any local networking group will reveal the extent of this trend: startups include everything from micro-farmers who grow herbs and vegetables for local restaurants, to interior design services, private chefs, pet trainers, social media content providers, event planners, and high tech consultants.  Real estate in the greater D.C. region is once again booming, with a consequent wave of new realtors jumping into the field, following retirement from other sectors. Many of these older entrepreneurs find their new careers not simply fulfilling, but lucrative as well.

Not all second careers are seamless transitions between one profession and the next. Careers in the ministry, real estate, health care and many others require training, and some require degrees.

There are many organizations that offer training, including community colleges. Online sites can also be helpful. Workforce 50 (http://www.workforce50.com/), Encore.org (www.encore.org/learn/over-50-and-looking-job), Senior Job Bank (www.seniorjobbank.org/), along with many others, offer both online help and contact information for further assistance.

The so-called leading edge boomers, those Americans now hitting the traditional age of retirement, literally changed the world with their determination to redefine the rules and do things their own way. And there is no indication they’re going to start “listening to the man” just because they’re turning 65.

Laurie MacNaughton [NMLS 506562] is a freelance writer and Reverse Mortgage Consultant at Middleburg Mortgage, a Division of Middleburg Bank. She can be reached at: 703-477-1183 or LMacNaughton@MiddleburgBank.com.

 

Trulia Report Finds It’s Still Cheaper to Buy a Home Than to Rent

Reposted from NationalMortgageProfessional.com   Mon, 2013-09-23

Trulia has released its Summer 2013 Rent vs. Buy report, revealing whether buying a home is more affordable than renting in America’s 100 largest metropolitan areas. Looking at homes for sale and for rent on Trulia between June 1 and Aug.31, 2013, this study compares the average cost of renting and owning for all homes on the market in a metro area, factoring in all cost components including transaction costs, taxes, and opportunity costs.

In the last year, the mortgage rate for a 30-year fixed-rate loan rose from 3.75 percent to 4.80 percent, raising the cost of buying a home relative to renting. Home-ownership is now 35 percent cheaper than renting nationally, down from being 45 percent cheaper one year ago. Yet despite their current upward climb, mortgage rates will not tip the housing market nationally in favor of renting over buying until rates hit 10.5 percent nationally, given current home prices and rents.

While home-ownership is still more affordable than renting in all of the 100 largest metros, rising mortgage rates may soon turn the tide. Buying a home is now less than 10 percent cheaper than renting in San Jose and San Francisco—a dramatic shift from being 31 percent and 28 percent cheaper a year ago, respectively. Even in Detroit, where purchasing a home is a no brainer, buying has narrowed to being 65 percent cheaper than renting in 2013, versus being 70 percent cheaper in 2012. If rates keep rising and current rents and prices remain flat, San Jose will become the first housing market to tip in favor of renting once mortgage rates hit 5.2 percent.

“While it’s hard to believe after the recent spike in mortgage rates, it’s still more than one-third cheaper to buy a home than to rent,” said Jed Kolko, Trulia’s chief economist. “Recent mortgage rate and home price increases have made buying significantly more expensive than last year, but not enough to tip the math in favor of renting. This is because rates remain well below historical norms, and prices are still slightly undervalued, too.”

 Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com

 

Licensed in: Maryland (MD), Washington, DC, Virginia (VA), Pennsylvania (PA), Delaware (DE), North Carolina (NC), South Carolina (SC), Georgia (GA), Tennessee (TN).

Visit me on Facebook at www.facebook.com/MiddleburgReverseMortgage

                 

Reversal of Fortune – One Advisor’s Use of Reverse Mortgage in Planning Boomers’ Retirement

Boomers not only went into the Great Recession with scanty savings, but they have had less time to recover before retirement. Consequently, reverse mortgage is likely to play a crucial role in their long-term financial planning.

This is a great piece on one wealth manager’s use of reverse mortgages as he works to create a secure retirement for his clients.

http://www.financial-planning.com/30-days-30-ways-2013/reversal-of-fortune-2686616-1.html?ET=financialplanning:e14811:71855a:&st=email&gpt_units=/30Days30Ways/

To learn more about reverse mortgage, give me a call – I always love hearing from you.

Laurie

Laurie MacNaughton [NMLS# 506562] · Reverse Mortgage Consultant, President’s Club · Middleburg Mortgage, a Division of Middleburg Bank · 20937 Ashburn Road, Suite 115 ·Ashburn, Virginia 20147 · 703-477-1183 Direct · LMacNaughton@MiddleburgBank.com

Licensed in: Maryland (MD), Washington, DC, Virginia (VA), Pennsylvania (PA), Delaware (DE), North Carolina (NC), South Carolina (SC), Georgia (GA), Tennessee (TN).