Reverse Mortgages and Rising Interest Rates

by Kent Kopen | Jan 10, 2023 |

FHA HECM, Liability Management |

 

Property Tax Solutions For Texas Seniors

Joy and fear cannot coexist. I was reminded of that recently when a nice, but distraught, lady in Texas called me about property taxes.

 

Linda received her 2022 tax Notice of Appraised Value and said, “I cannot believe what this says my house is worth.”  She’s concerned her property taxes are going to force her to sell and move.

Reverse Mortgage Purchase Strategy

People who do not understand the Reverse Mortgage Purchase Strategy are missing out on a powerful solution to three common senior problems: (1) insufficient cash, (2) a broken monthly budget, and (3) living in a home that is less than ideal or just unsafe.

 

The centerpiece of this strategy is using a reverse mortgage as a purchase-money loan. You can’t say this is a misunderstood strategy because almost no one knows anything about it. 

 

Are Reverse Mortgages America's Most Hated Loan?

by Kent Kopen | Mar 18, 2019 |

home equity solutions |

Two of the most difficult things to watch retirees deal with are health crises and financial challenges. When there is no solution, it’s heartbreaking.

 

Our mission is helping people overcome the struggle of not having enough cash or income in retirement so they can make the most of the rest of their years. Reverse mortgages are not the problem, they're an attempt to address the real problem.

 

5 New Jumbo Reverse Mortgage Options

 

Everything we do revolves around improving our clients' quality of life in retirement. Let’s face it, money stress can be all consuming – in a bad way.

Jumbo Reverse Mortgage Examples

Two cases where people with considerable equity leveraged new jumbo reverse mortgage options to solve real-world money issues.

 

Example one: eliminate an existing mortgage payment and fund $5,000 monthly healthcare. Example two: a home owner wants a second mortgage with no monthly payment.

FHA HECM Not for High Value Homes

 

In 2018, homeowners with houses worth over $800,000 got many new options allowing them to safely access some of their house-based wealth more efficiently than ever before.

 

It was also the year when changes to the popular FHA reverse mortgage made them even less useful for high value homes.

Hybrid Jumbo Reverse Mortgage Strategy

What do you do when an unexpected medical event changes everything?

 

Hopefully, you have people in your life like our recent client Dr. Thompson.

 

This is his story and it includes a beautiful example of real friendship.

 

Reverse Mortgage - Delay Social Security

by Kent Kopen | Aug 28, 2018 |

Wealth Management |

Those who delay starting Social Security can get up to 75% more than those who apply early, but how do you bridge the income gap?

Financial planners and homeowners are starting to think about using home equity to realize a better retirement. This was predictable because for most Americans, stocks, bonds and savings makes up less than a third of their net worth.

 

Reverse Mortgage - Retirement Income Planning

by Kent Kopen | Aug 27, 2018 |

Wealth Management |

The three biggest retirement expenses according to U.S. News are housinghealth care, and taxes. Home equity solutions have unique attributes that make them worthy of consideration.

 

When your outflow exceeds your income, your upkeep becomes your downfall.

New Reverse Mortgage Rules - Better or Worse

by Kent Kopen | Apr 30, 2018 |

FHA HECM |

Did the significant reverse mortgage rule changes in 2017 have a positive or negative effect on FHA-insured reverse mortgages? The biggest impact of the government’s changes has been reduced loan amounts, which is frustrating many seniors. Fortunately, the new proprietary Jumbo Reverse Mortgage is helping fill the gap.

Jumbo Reverse Mortgage - Pros & Cons

There are two types of reverse mortgages currently available: the FHA-insured HECM (Home Equity Conversion Mortgage) that is frequently advertised on TV, and a new proprietary loan referred to as a Jumbo Reverse. Jumbos are primarily designed for people who have homes worth over $800,000 or non-FHA-approved condos worth more than $500,000. Jumbos allow homeowners to access more of their wealth than is possible with an FHA product.

 

10 Reverse Mortgage Counseling Facts You Need to Know

by Kent Kopen | Mar 16, 2018 |

How loan works, FHA HECM |

We’re often asked, “What is reverse mortgage counseling and why do I have to do it?”

 

People worry they won’t pass counseling or they’ll have to meet someone or they’ll be asked uncomfortable questions.

 

This article will eliminate the mystery and fear around counseling and help you pass the counseling questions asked at the end.

Top 3 Reverse Mortgage Strategies for Financial Advisors

by Kent Kopen | Mar 05, 2018 |

Wealth Management |

Financial advisors share a common challenge: help clients fund current lifestyle without spending down retirement savings too quickly.

 

This article covers the top 3 reverse mortgage strategies to help advisors improve the odds that their clients will not outlive their money. Click here to see how much a client can get with a reverse mortgage.

 

How Real Estate Agents Can Overcome 3 Big Challenges

by Kent Kopen | Feb 08, 2018 |

Purchase |

Being a seasoned real estate agent is not easy right now. Some of my sharpest Realtor® friends tell me they’re facing three simultaneous challenges: (1) their business models are becoming obsolete because of technology, (2) scarce inventory, and (3) boomers want to move but are having trouble qualifying for a conventional loan.

The New Reverse Mortgage

by Kent Kopen | Oct 12, 2017 |

FHA HECM |

Remember when you were a kid and your favorite cereal box said new and improved? New Reverse Mortgage is a fair description because the government frequently makes changes to the program that are designed to protect seniors and tax payers. This October saw one of the biggest changes ever.

Making Payments on a Reverse Mortgage

by Kent Kopen | Jul 24, 2017 |

Benefits |

 

Making optional payments on a reverse mortgage may be strategically wise. Academic research since 2012 suggests that the delayed and gradual use of a reverse line of credit can be extremely helpful in prolonging the longevity of an investment portfolio.*

Reverse Mortgages and Taxes

by Kent Kopen | May 30, 2017 |

Taxes |

I'll Lose My Tax Deduction

 

If I get a reverse mortgage, I’ll lose my mortgage interest write-off.  We frequently hear that when we first meet clients.  It is a common misconception. 

 

What homeowners 62+ really need is clarity and direction around how and when interest on a reverse mortgage is tax deductible.

How Much Can I Get with a Reverse Mortgage?

by Kent Kopen | May 15, 2017 |

How loan works |

The most frequent question I hear is, “How much can I get with a reverse mortgage?” That’s a challenging question because the answer depends on several factors and it involves strange industry terminology. 

 

The second question I'm asked is, “Why does it have to be so complicated?

Danger of a HELOC in Retirement

by Kent Kopen | Apr 26, 2017 |

Benefits, How loan works, Risks, FHA HECM |

 

Retirees are going to have to access some of the wealth trapped in their home.  The question is how?  Using a conventional HELOC (home equity line of credit) can be especially risky for retirees.

Funding Retirement with Home Equity

by Kent Kopen | Apr 24, 2017 |

Wealth Management, Income |

It’s easy to find people who say you should not touch the equity in your home, but that tends to be an emotional response that is out of sync with Americans' reality.  This is why many leading academic journals and news organizations are talking about the importance of home equity in retirement.

 

In a previous era, people paid off their homes, they had lifetime employment, pensions paid their bills and they didn’t live as long.  Now, healthcare inflation far exceeds wage growth, employment isn’t nearly as secure, and few have pensions – at least ones they can rely upon.

Rent or Own in Retirement

by Kent Kopen | Mar 23, 2017 |

Wealth Management, Purchase |

Retirees are outliving their savings.  When they do… then what?  This article is for homeowners who have considerable equity but can’t afford, or don’t want to maintain, their current house.  Then the question becomes: is it better to sell and rent, or downsize and buy?

 

Paying Off a Reverse Mortgage

by Kent Kopen | Mar 06, 2017 |

Taxes, How loan works |

In the past two years, there has been much favorable press around reverse mortgages both from high profile news sources (Wall Street Journal, NYT, Forbes, Bloomberg) and Ph.D. academics discussing a reverse mortgage as a wealth management tool.  You can find these articles on our Facebook page.  Despite the coverage, there is a lot of confusion around what happens at the end of a reverse mortgage.  We're frequently asked the following...

 

Qualifying for a Reverse Mortgage

by Kent Kopen | Mar 03, 2017 |

How loan works, FHA HECM |

Getting a reverse mortgage is not like the old days. Since 2014, there are more rules, more paperwork, and borrowers must now qualify to get a HECM (Home Equity Conversion Mortgage).  These changes were designed to protect seniors and tax payers by reducing defaults. Most people do not understand reverse mortgages; even fewer are aware of these recent changes. Most people who assume that because they have a lot of equity, they can automatically get a reverse. They are surprised and frustrated when they find out that’s no longer the case.

 

The Pros and Cons of a Reverse Mortgage

by Kent Kopen | May 06, 2016 |

Income, Benefits, How loan works, Risks |

If you’re trying to cut a board in half, a hammer is a terrible tool.  This analogy applies to most financial products or strategies – the pros and cons depend on the context.

At What Age Can You Get a Reverse Mortgage

by Kent Kopen | Apr 14, 2016 |

How loan works, FHA HECM |

 

We’re often asked, “At what age can you get a reverse mortgage?”  The quick answer is 62, however, when more than one person lives in the home, the answer is more complicated. 

 

Below we'll explore the details, including recent changes by HUD (the Department of Housing) which were implemented to protect younger spouses who aren’t on the loan.

 

 

Do Reverse Mortgages Make Sense

by Kent Kopen | Apr 13, 2016 |

Income, Benefits, Risks, FHA HECM |

One of the most frequent questions we hear is, “Do reverse mortgages make sense?” But that’s not where the conversation starts. Over the last 9 years I’ve seen a recurring pattern that goes like this: rejection, confusion, understanding, disbelief, acceptance.

 

The Rejection stage reminds me of a quote: What we don't understand, we fear. What we fear, we judge as evil. What we judge as evil, we attempt to control. And what we cannot control...we attack.  –D. Brown

 

When people learn reverse mortgages are safe, highly-regulated, government-insured loans, they realize those who say, “Reverse mortgages are a scam,” are ignorant; they just lack knowledge.

Minimize Property Taxes - CA Prop 60, 90

by Kent Kopen | Mar 31, 2016 |

Taxes, Purchase |

Our post titled, Reverse Mortgage Home Purchase Strategy, detailed a three-part strategy around continuing to be a home owner as opposed to selling and becoming a renter. The financial benefit to the senior and their estate is considerable. The third part of that strategy is minimizing property taxes by taking advantage of CA Propositions 60/90 when possible. This article answers the most common questions we hear about Prop 60 or 90 and provides some background information you'll need to implement the strategy.

 

Steps to Get a Reverse Mortgage

by Kent Kopen | Mar 18, 2016 |

How loan works, FHA HECM |

 

How to intelligently shop for, compare, and get an FHA-insured reverse mortgage. 

Our passion is helping seniors overcome the challenge of not having enough income or cash. The financial tool we specialize in is a reverse mortgage. We help homeowners, home buyers, and professionals who refer to us.

 

Frequently, we hear thoughtful questions like: 

  •  How do I know if this is suitable or right for me?
  •  What does it take to qualify or would I be eligible?
  •  What are the benefits, costs, pros and cons?
  •  What are the steps and how long do they take?

 

This article includes two videos: 1) an Overview of the process; 2) an Explanation of each of the steps, and an opportunity to download a one-page Map that shows approximately when steps occur.

How to Get a Reverse Mortgage

by Kent Kopen | Feb 03, 2016 |

How loan works, FHA HECM |

Begin with the end in mind

Most people approach borrowing and debt very transactionally, which is not their fault because they've never been trained how to view debt as one part of a comprehensive wealth management plan.  

 

Think of a well-constructed plan like a wheel with six spokes: 1) income, 2) assets, 3) liabilities (debt), 4) taxes, 5) legal, and 6) risk (insurance).  If one spoke is longer or shorter than the others, the wheel will be out-of-round and progress will be slower and more difficult than it needs to be.  

 

When financial planners, Realtors, home owners or buyers contact me about how to get a reverse mortgage, I encourage them to step back, take a look at the bigger picture, and begin with the end in mind.  Where does the client want to be in 3, or 5, or 10 years?  How does each spoke affect the others?

 

Reverse Mortgage Home Purchase Strategy

by Kent Kopen | Aug 28, 2015 |

Purchase |

Most of us spend more than half our income on taxes and interest.  Subtract out healthcare, the high cost of housing, and maybe college tuition and it’s no wonder the U.S. savings rate over the last ten years has been as low as 1.9% and is currently 4.8%.1  During retirement, our focus is on minimizing monthly payments and taxes.

This post is about a three-point strategy I teach clients and financial services professionals to minimize monthly payments, including taxes, and increase wealth in retirement.  Parts of this Three-Dimensional Reverse Purchase™ strategy are either unknown or misunderstood, but when the three components are done in combination, the difference in quality of life, sense of control, and size of heir’s inheritance is substantial.

 

Are Reverse Mortgages Expensive?

by Kent Kopen | May 01, 2015 |

Benefits, How loan works, Risks, FHA HECM |

There are several myths about reverse mortgages: the lender will take your house, they’re very expensive, the kids won’t get anything, etc.  Ongoing and recent changes by HUD to the FHA-insured reverse mortgage program have enhanced its long-term stability and suitability as a solution to one of America’s biggest demographic challenges – bridging the gap between longer lifespans and insufficient retirement savings.  Here we will consider the claim that reverse mortgages are expensive.

 

How to Qualify for a Reverse Mortgage

by Kent Kopen | Apr 20, 2015 |

How loan works, FHA HECM |

Financial planners, CPAs, and estate planning attorneys continue to ask about the new HECM requirement called Financial Assessment and how their clients can Qualify for a Reverse Mortgage.It has been described as the biggest change to ever happen to the reverse mortgage program.

 

Now, unlike before, lenders must analyze the borrower’s credit history, liabilities, debts, and income to determine their willingness and capacity to meet their financial obligations to qualify for a reverse mortgage.