Lenders See Reverse Mortgage Purchase Helps In Case of Divorcing Borrowers

Lenders See Reverse Mortgage Purchase Helps In Case of Divorcing Borrowers

Life events often come into play, said Pamela Kirkpatrick, reverse mortgage adviser with, a leading Reverse Mortgage Lender, speaking on a panel during the National Reverse Mortgage Lenders Association annual convention in October. More often than not, a reverse mortgage can help when individuals—and couples—may least expect it. 

One of those life events: divorce. 

Solution for the Attorney and the couple:  The Reverse Mortgage for Purchase Program.

“Selling in a down market can pose asset risk,” Kirkpatrick says. “Both parties still need a place to live. This can be answered in several ways. For example, one person keeps the home and takes a traditional HECM, then takes some of that equity to do a HECM for Purchase on a new home for the moving spouse. This is a good way to solve the problem with the least amount of risk leveraging the asset.” 

 The purchase also comes with some other considerations for those who have had success in making the deals happen. 

“It often goes unlooked at,” Kirkpatrick says. “It really opens the door to have the opportunity to speak with attorneys, title companies and people participating in the process. Inevitably you will find people saying ‘I wish I would have known.’”

The product, having launched in 2008, has averaged around 130 endorsements per month, according to the latest data from the Department of Housing and Urban Development. Many think it has performed under potential due to the lack of education on the part of Realtor's and other business people involved in the HECM for Purchase process. 

“As the housing market continues to rebound, the HECM Purchase offers tremendous opportunities,” said Sarah Hulbert, retail business development manager at 1st Reverse Mortgage. “It has been around for four years, but has been slow to catch on.”

Aside from the obvious situation of a borrower looking to downsize or relocate in retirement out of want, originators report they have seen situations where the Home Equity Conversion Mortgage for Purchase works well; sometimes when they really need an alternative solution.

While it has been in the marketplace for several years, the reverse mortgage for Purchase has never quite taken off. However, some lenders say they are having success with the product as it meets the needs for certain outside-the-box borrowers.
From an originating standpoint, turn times of less than average. an average turn time of 30 to 45 days—much faster than a conventional purchase.

Want to learn more on how to increase your sales volume through the use of the Reverse Mortgage for Purchase Program, just call George Lagarde at 702-845-4632, or email at: GLagarde@allwestern.com.

George Lagarde

ReverseMortgageLV.com

GLagarde@AllWestern.com

MetLife: Mounting Senior Care Costs Point to Aging in Place Solution

MetLife: Mounting Senior Care Costs Point to Aging in Place Solution

The cost of long-term care is rising in many areas, but the MetLife Mature Market Institute’s most recent senior care market survey ^[1] might be good news for people who want to age in place, as wages for home health aides remained flat from 2011 to 2012.

Rates for skilled nursing and assisted living both went up year-over-year, and while the cost of “homemaker” services grew 5.3%, rates for adult day services and home health aides did not go up.

Average costs for adult day services stayed at $70 a day in 2012, and wages for home health aides, averaging $21 an hour, remained unchanged from 2011 levels. Wages for “homemakers” rose to $20 an hour.

“The desire for families and friends to remain at home, or ‘age in place,’ has created a diverse and dynamic home care service industry and a variety of service providers,” says MetLife.

The cost of a private room in a nursing home rose 3.8% to a national average rate of $248 a month, or $90,520 a year. The expense for a semi-private room increased 3.7% to  $222 a month, and an average yearly rate of $81,030. Assisted living costs grew 2.1% to an average monthly rate of $3,550, or $42,600 a year. 

What we see is many more Seniors are wanting to stay at home, and live out their lives in their own surroundings.  And with the use of the Reverse Mortgage product, they can achieve this goal by tapping into the equity in their homes to pay for their living expenses. 

Allow me to show you just how the Reverse Mortgage Product will not only benefit your clients, but also increase your LTC business.  Please contact me at: George Lagarde 702-845-4632, GLagarde@allwestern.com.

George Lagarde

ReverseMortgageLV.com

GLagarde@AllWestern.com

A “Standby” Reverse Mortgage A Tool for Financial Planners

A “Standby” Reverse Mortgage

A Tool for Financial Planners

Here is an example of using a reverse mortgage line of credit as an investment vehicle.  Calling it, “A Standby Reverse Mortgage”, let’s say a customer receives a Line of Credit from his reverse mortgage for $250,000: Using a Saver with minimal closing costs or Standard (with regular closing costs) Reverse Mortgage. 

Let’s assume the customer is comfortable in taking the $250,000 of cash held in reserves in his line of credit.  It’s cost  has been approximately $8,600 to obtain the line of credit.  And lets estimate the cost on any outstanding balances to maintain this line is 3.212% plus the 1.25% MIP imposed by FHA for a total cost of 4.462%.  Again, only on outstanding balances if any.

Now, having this $250,000 line increasing each year so that on the second year it will grow by $11,415 to $262.054.  The third year it increases by $11,935 to $273,989.  The fourth year it increase by $12,479 to $286,468.  And, the fifth year it increase by $13,046 to $299,514 etc.

Since the Reverse Mortgage carries no other costs other than the MIP and interest for the amount outstanding, and there are no monthly payments due to the bank, it becomes a fantastic tool for Financial Planners to use for their clients who have large price tag homes with a lot of equity and desire the opportunity to earn a larger amount on their money than normally paid by a Bank on a Certificate of Deposit or many other investment vehicles.

By using the “Standard” Reverse Mortgages, the closing costs will be greater by about $9,750, but the customer will see a credit line amount of $289,888, vs the $250,639 of the Saver Reverse Mortgage.  A specific side by side comparison of both programs should be reviewed by the Financial Planner and the Customer before making a final decision as to which program to follow.

For a complete comparison packet of information on this unique FHA Reverse Mortgage program, please contact George Lagarde, NMLS 18581 at 702-845-4632 for a confidential appointment.   

George Lagarde

ReverseMortgageLV.com

GLagarde@AllWestern.com