Reverse Mortgages in San Antonio, Texas Keep Seniors in Their Homes Longer

Visit me at www.texasreverse.net if you need help with a reverse mortgage in the San Antonio, TX area.

The National Council on Aging Reminds Us: Reverse Mortgages can be used by over 13 million Americans to Remain Independent and in Their Homes Longer

WASHINGTON -- A study released by The National Council on the Aging (NCOA) shows that reverse mortgages can be used by over 13 million Americans to pay for long-term care expenses at home, allowing many to remain independent and in their homes longer.

“The study shows that reverse mortgages have significant potential to help many seniors pay for help at home or to make home modifications. It also points to the need for strong consumer safeguards and lower transaction costs if these loans are to appeal to the millions of older Americans who could potentially benefit,” said NCOA president and CEO James Firman.

According to the study, there are some 9.8 million elder households (aged 62 and older) that are dealing with an impairment that can make it hard to live at home. In total, these households could access as much as $695 billion through reverse mortgages. For individuals, the extra cash could go a long way to help with family caregiving and other long-term care expenses. For example, a borrower aged 75 years old with a home worth $100,000 could receive a reverse mortgage loan that could pay them $500 a month for almost 12 years.

“This is an important study that, for the first time, shows that elderly homeowners, many with chronic conditions, can use reverse mortgages to pay for care at home,” said Jim Knickman, vice president for Research at the Robert Wood Johnson Foundation. “We hope that these findings will prompt new thinking into how the nation addresses the challenge of financing long-term care.”

Reverse mortgages are loans that allow homeowners aged 62 and over to convert home equity into cash while living at home for as long as they want. Borrowers continue to own their homes, and do not need to make any monthly payments. Instead, they can choose to receive the funds as a lump sum, line of credit, or as monthly payments (for up to life). The loan comes due only when the last borrower moves out, dies or sells the home.

The “Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long Term Care” report, funded by the Centers for Medicare and Medicaid Services and the Robert Wood Johnson Foundation, also shows how reverse mortgages can alleviate financial pressure not only for individuals and families, but also for state Medicaid programs and the federal government. Increasing the market for reverse mortgages could save Medicaid $3.3 billion (with a four percent take up rate) annually by 2010.

"Many seniors and their families can benefit from effective ways to pay for the long term care services they need, in the setting they prefer," said Dr. Mark McClellan, administrator of the Centers for Medicare & Medicaid Services. "NCOA's report shows that reverse mortgages can provide real help in financing long term care needs."

However, there are several obstacles to their growth for this purpose. For example, the NCOA study shows that while two-thirds (67 percent) of older homeowners today have heard of a reverse mortgage, only 9 percent indicate that they are likely to use this financing option to pay for assistance at home. Many worry that they risk impoverishment, or won’t be able to leave a legacy to their children if they tap home equity. The cost of these loans, and current Medicaid policies on how reverse mortgages affect eligibility for long-term care benefits, also appear to be barriers.

“We need expanded public education, and additional work to explore how to reduce the cost of tapping home equity, to strengthen consumer protections, and promote innovation,” said Barbara Stucki, PhD, project manager for NCOA’s Use Your Home to Stay at Home project. “Overcoming these obstacles will mean that reverse mortgages can play an important role in helping many older Americans pay for the supportive services they need to continue to live at home safely and comfortably.”

According to Firman, NCOA will continue to play a leadership role in promoting the appropriate use of reverse mortgages to help pay for long term care at home.

Founded in 1950, The National Council on the Aging is a national network of organizations and individuals dedicated to improving the health and independence of older persons; and increasing their continuing contributions to communities, society, and future generations.; For more information on NCOA, visit www.ncoa.org.

A PowerPoint presentation further explains findings from the report.

The report is also available online.

Background

Reverse Mortgages for Long-Term Care
“Use Your Home to Stay at Home”™

Started in September 2003 by The National Council on the Aging (NCOA), the “Use Your Home to Stay at Home” project has developed a national blueprint for encouraging the use of reverse mortgages to help older Americans pay for long-term care services at home. Reverse mortgages are a special type of loan that allows people age 62 and older to convert equity in their home into cash while they continue to live at home for as long as they want.

Long-Term Care Costs and Home Equity

Currently, the costs of long-term care are primarily paid out of pocket by consumers or by Medicaid, the federal/state program designed to pay costs of health care for low-income individuals. In 2000, our nation spent $135 billion a year on long-term care for those age 65 and older, with the amount likely to double in next 30 years. Most of those dollars pay for care in skilled nursing facilities.

Recent studies show that older Americans, including those who have serious health problems and need long-term care, want to live at home rather than in an institution. Most elders (82 percent of those age 62 and older) own their homes and 74 percent of those own them free and clear. With over $2 trillion tied up in home equity, this financial resource has the potential to dramatically increase the ability of seniors to pay for long-term care at home. Reverse mortgages can free up needed cash while enabling seniors to continue to own their home.

Of the nearly 28 million American households age 62 and older, NCOA has found that almost half (48 percent), or about 13.2 million, are good candidates for a reverse mortgage. The amount that these older households could receive from a reverse mortgage is substantial – on average $72,128. These funds can go a long way to pay for help at home and for retrofitting the home to make it safer and more comfortable. For some, they could be used to purchase long-term care insurance if they qualify. In total, an estimated $953 billion could be available from reverse mortgages for immediate long-term care needs and to promote aging in place.

For many older families, home equity is their single, biggest financial asset. Unlocking these substantial resources can help empower “house rich, cash poor” seniors by giving them additional resources to purchase the services they feel best suit their needs. The use of private funds from reverse mortgages can also strengthen community long-term care programs and reduce the burden on state Medicaid budgets.

Funders

The “Use Your Home to Stay at Home”™ project is funded by the Centers for Medicare and Medicaid Services, the federal agency that operates Medicare and Medicaid, and the Robert Wood Johnson Foundation.

Program Management

James P. Firman, Ed. D., NCOA president and CEO
Jay Greenberg, Sc.D, executive vice president
Barbara Stucki, Ph.D., project manager

Headquarters

The National Council on the Aging
300 D Street SW Suite 801
Washington, DC 20024
(202) 479-1200
(202) 479-0735

About NCOA

Founded in 1950, The National Council on the Aging is a national voluntary network of organizations and individuals dedicated to improving the health and independence of older persons; increasing their continuing contributions to communities, society, and future generations. NCOA is a national voice and powerful advocate for public policies, societal attitudes, and business practices that promote vital aging. NCOA is an innovator, developing new knowledge, testing creative ideas, and translating research into effective programs and services that help community service organizations serve seniors in hundreds of communities. And, NCOA is an activator, turning creative ideas into programs and services that help community services organizations serve seniors in hundreds of communities. For more information on NCOA, visit www.ncoa.org.

Reverse Mortgages Help Seniors Buy Homes and Save Cash in San Antonio, Texas

Reverse mortgages have traditionally been used by seniors to tap equity in their homes. Seniors, age 62 or older, may want to consider a Reverse Mortgage if they want:

1. To preserve their cash

2. No monthly payment

3. To qualify for a loan without any income verification

4. To get a loan despite bad credit

To preserve cash, a senior may want to secure a reverse mortgage instead of paying off their new home with the cash proceeds from the sale of their previous home. The amount seniors can borrow depends on their age(s) and the appraised value of the home being purchased.

Reverse mortgages have no monthly payments-ever. In fact, the homeowner may receive a monthly payment from the home’s equity. The net equity in the home is pledged to repay the HECM when the home is sold after the owner passes away. However, an extended absence for medical treatments or assisted living stay could trigger a forced sale of the home (12 months or longer).

Since the home’s equity will be used to repay the loan, there is no requirement the borrower provide proof of income. In the event the senior is receiving monthly payments from their homes equity, the size of the payments is determined by the projected life span of the borrower(s) and equity available as security. Bad credit is not an obstacle either because the eventual sale of the property, not the senior’s creditworthiness, is how the lender expects to recover their loan disbursements.

The senior can also receive a lump sum of cash to help pay for the home purchase and not receive any monthly payments. Again, the loans are set up so the senior can reside in the home for the remainder of their life. These loans are insured by FHA. Prospective borrowers will be thoroughly counseled on the ins and outs of this unusual loan.

Here’s a few other details:

• Property must be owner occupied primary residence of borrower
• Mortgage insurance premium (MIP) required
• No seller concessions or credits
• Buyer must pay normal closing costs and seller must pay for all repairs
• No gift funds allowed to borrower
• Loan limit is $625,000 through 2009

Most importantly, use a local lender. Contact me at www.texasreverse.net if you have any questions.

A Reverse Mortgage has Many Benefits in San Antonio, Texas

Here are just a few:

¨ Stay in Your Home for Life

¨ Supplement Your Income

¨ Pay off your mortgage or other liens against your property

¨ Make necessary repairs or improvements to your home

¨ Pay For Long-Term Health Insurance

¨ Purchase pre-paid funeral plans

¨ Hire In-Home Health Care

¨ Use Income for Debt Repayment

¨ Help your children or a family member

¨ Go on a dream vacation

¨ Buy a new car

The great reasons why a reverse mortgage is right for you!

¨ The Income Received is Tax Free

¨ There are No Income Qualifications

¨ There are No Monthly Payments

¨ Title remains in Your Name

¨ The loan is not due and payable until you Permanently leave the home

• For more information or a free consultation, contact Melinda Hipp, Reverse Mortgage Specialist, at Legacy Mutual Mortgage. (210) 492-4900 or toll free at 877-492-4900 or e-mail at melinda@legacymutual.com Visit her website at www.texasreverse.net

Special Report: How to unlock the Retirement Funds hidden in your San Antonio, Texas Home

- Consider a Reverse Mortgage!!!

SOME FACTS ON THE “NEW RETIREMENT”:

§ Retirements are getting longer and people are outliving planned retirement savings. People are living on average 4 months longer every year.

§ Retirement expenses are increasing due to spiraling health care and medicine costs. The Center for Retirement Research at Boston College announced recently that 43% of working households were in danger of having too little income to fund their retirement needs.

§ Even now, people in the 85 and over age group are the fast growing group entering serious financial distress.

§ As over-achieving baby boomers enter retirement, there will be greater emphasis on doing more with retirement than ever before.

§ Homes often represent the largest asset for retirees and over 80% of these people own their homes. People in the 65 and over age group are sitting on over $2,900,000,000,000.00 in untapped home equity while at the same time having the lowest median income.

WHAT IS A REVERSE MORTGAGE?

A Reverse Mortgage is a special type of “loan” that lets senior homeowners convert a portion of the equity in their home to cash. These loans are regulated and in most cases backed by the Federal Government in order to protect the homeowner. To qualify, the homeowner simply has to be over 62 years old, own his/her own home and have significant equity in their home (usually 50% or more). There are NO credit or income requirements or health check requirements.

Under a reverse mortgage the homeowner makes NO monthly payments, but just like a conventional “forward” mortgage the homeowner retains the title to the home while the property is pledged to the lender as security for the upfront loan. The homeowner remains responsible to pay taxes, insurance, and any other obligations that might create a lien on the property as well as to maintain the property. Some or all of the costs of setting up the loan can be paid with loan proceeds advanced at closing.

WHAT CAN THE LOAN BE USED FOR?

Reverse Mortgages can give older homeowners the funds they need in order to lead a more secure, independent retirement! Proceeds from a reverse mortgage are very flexible and can be used for any purpose the homeowner wishes. Many older adults are having trouble making monthly ends meet due outliving their retirements and/or experiencing surprising, costly health care bills. Beyond basic life needs, many older homeowners find they need cash for a variety of other reasons.

- Payoff existing mortgage.

- Home repair or modification.

- Purchasing better health insurance or long term care insurance.

- Upgrading primary residence or purchasing a second home

- Purchasing a higher value life insurance policy to enhance their estate.

- Travel

- Gifts for children or philanthropy

- Reducing estate tax base and/or funding estate tax payments.

These benefits come without the older adult touching their retirement assets and without tax on the loan proceeds, all while keeping the homeowner in their home for as long as they would like!

HOW DOES THE AVAILABLE LOAN AMOUNT GET DETERMINED?

The amount of loan proceeds available to the homeowner on their age, the appraised value of home, the costs associated with the loan and regulations set by the Federal Housing Administration or loan investors. Generally speaking, the older the homeowner is and the more equity they have in their home, the more cash they can receive. The higher the home value, generally the higher the loan amount for which the homeowner may qualify. Interest rates are set by the federal government and do change over time.

Lower rates allow more cash to the homeowner.

HOW DOES REPAYMENT WORK?

Over time the loan balance on a reverse mortgage will rise. It rises because the homeowner is being advanced money and is being charged interest. BUT, no payments are being made, so the homeowner’s equity slowly drops over time.

No repayment is required under a reverse mortgage as long as the homeowner lives in the home as their primary residence. When the last surviving homeowner passes away, sells the home or moves away, the full loan balance comes due. The loan balance can never exceed the value of the home (after deducting costs of sale) at the time that the loan becomes due. Reverse mortgages are non-recourse loans. These loan types protect the homeowner AND the estate from owing more than the property is worth.

DIFFERENT TYPES OF REVERSE MORTGAGES

There are two basic types of reverse mortgages. First is the federally insured Home Equity Conversion Mortgage (HECM) which accounts for over 80% of all reverse mortgages in the United States. Second, there are proprietary reverse mortgage products developed by individual lenders; the “Home Keeper” sponsored by Fannie Mae and the “Cash Account” sponsored by Financial Freedom Corporation (a specialized division of IndyMac Bank Corp.) are the more popular options.

The proprietary products tend to be best for homeowners with high value homes. A quick conversation and review of your particular financial situation with one of our counselors will help determine which product is right for you.

WHAT ARE THE OPTIONS FOR GETTING THE LOAN PROCEEDS?

Homeowners can generally choose among different options for receipt of their loan proceeds. Payment options can be changed at any time on remaining non-disbursed loan proceeds. Listed below are the options for receipt of proceeds:

Tenure – The homeowner receives equal monthly payments from the lender as long as the home is occupied as the owner’s primary residence.

Term – The homeowner receives equal monthly payments for a period of months selected by the homeowner.

Line of Credit – The homeowner may draw loan proceeds in amounts and at times he/she chooses until the credit line is exhausted.

Lump Sum – The homeowner may draw all or any lesser amount available from the loan proceeds at the time of closing.

Modified Term – The homeowner may combine a line of credit with monthly payments for a number of months selected by the homeowner.

Modified Tenure – The homeowner may combine a line of credit with monthly payments as long as the home is occupied as the homeowner’s primary residence.

WHAT ARE THE COSTS OF A REVERSE MORTGAGE?

Many of the costs and fees necessary to obtain a conventional forward mortgage apply to obtaining a reverse mortgage. You can expect to be charged an origination fee, up-front mortgage insurance premium (for HECM only), an appraisal fee and certain other standard closing costs. Generally the reverse mortgage is a good solution for those seniors that intend to remain in their homes for at least several more years. More attractive options may be available for those with short-term capital needs. The longer a reverse mortgage is in place, the cheaper it gets!

Important to note! In most cases loan costs are capped by federal regulations and may be financed as part of the reverse mortgage itself. The government requires the lender to provide a FULL DISCLOSURE of loan costs known as the Total Annual Loan Cost RATE (commonly referred to as TALC). The TALC is similar to an APR on a forward mortgage; this rate includes all loan costs and is the average annual rate that would generate the total amount owed at any point if it were charged against the disbursed proceeds to that point. These TALC rates are an approximate “cost of capital” and can be used to evaluate the suitability of a reverse mortgage vs. other financing options! Contact one of our counselors for an in-depth explanation of each type of fee and resulting loan cost!

SOME COMMON MISPERCEPTIONS

In recent years, the federal government has more tightly regulated reverse mortgages in order to strengthen their ability to help older adults navigate retirement. Some common misperceptions are:

“The lender takes the house!” – FALSE - The homeowner always retains the title to the house. A reverse mortgage is only a loan.

“I can be thrown out of my home” – FALSE – The homeowner stays in the house until a maturity event occurs.

“I or my estate can owe more than the home is worth.” – FALSE - A reverse mortgage is a non-recourse loan. The homeowner can NEVER owe more than the home is worth.

“My heirs will never support this idea!” – FALSE - Experience has shown that children, other family members and advisors are more concerned about retirees’ present quality of life and ability to make ends meet than about future inheritance.

GET MORE FACTS!

Reverse mortgages can be used not only to meet the immediate financial needs of older adults but are also useful tools in planning the long term needs of those close to retirement. If this has been an interesting report for you, please take the time to contact your real estate financial experts at Legacy Financial Services. We encourage you to involve your trusted advisors as well; family, friends, financial advisors, legal advisors and tax advisors. Importantly, if you decide to proceed with learning more, homeowners are required to attend counseling from an independent HUD-approved counseling agency. Any questions you have should be addressed during that session. Again, bring along your advisors!

The financial security and independence provided by a reverse mortgage can allow many older adults to enjoy retirement in the comfort of their own home when many otherwise could not. Let us help you decide if a reverse is right for you!

We at Legacy Mutual Mortgage hope you have enjoyed this special report. Should you need more information, please go to the website at www.texasreverse.net or call Melinda Hipp, Reverse Mortgage Specialist at (877) 492-4900.

What Documents do I Need to Complete a Reverse Mortgage in San Antonio, Texas?

Following is a list of documents that will be required to complete a reverse mortgage application.

1. Original signed copies of all pages of the loan application and all disclosures all completed in blue ink and dated the same date on all forms.
2. Original Reverse Mortgage counseling certificate provided by third party reverse mortgage counselor
3. Proof of date of birth (driver’s license or birth certificate) and social security number (social security card or medicare card). (call if neither are available.)
4. Copy of recent homeowner’s insurance bill or name and phone number for insurance agent.
5. Copy of your survey of the home. This would normally be located in the package you received from the title company when you first purchased or last refinanced your home. The survey must be readable and have the surveyor’s seal. Please note that you must have a survey redone if you cannot locate it or you have significantly made structural changes to the home since it was last done.
6. Original death certificate of spouse if a widow(er). This is needed only if deceased spouse has not been removed from title to property.
7. Copy of your current mortgage statement/coupon book or names, addresses and account numbers for all mortgage debt and liens on the property.
8. If the property is held in a trust please provide us with a copy of the trust agreement.
9. If the person signing has Power of Attorney for the borrower, please provide us with a copy of the Durable Power of Attorney.
10. If the property previously had a mortgage balance that was paid off in full, please provide us with a copy of the satisfaction of mortgage, release of lien or warranty deed.
11. Check for $350 to Legacy Mutual Mortgage to cover cost of appraisal. (This cost can be rolled into your loan and this check is not cashed unless the client decides not to continue with the process after the appraisal has been completed.)

To start the Reverse Mortgage process, contact Melinda Hipp, Reverse Mortgage Specialist, at (210) 492-4900 or melinda@legacymutual.com. Visit Melinda at http://www.texasreverse.net.