Are YOU a good Fit for a reverse mortgage? Take this quiz and find out

Are You a Good Fit for a Reverse Mortgage? Take This Quiz and Find Out

June 6, 2014 | by Editorial Team

Have you been considering a reverse mortgage loan, but you’re not quite sure if it’s the right fit for you?

Home Equity Conversion Mortgages (HECMs) are insured by the Federal Housing Administration and allow qualified homeowners to borrow against the equity they’ve built up in their homes in the form of a non-recourse loan.

The non-recourse feature guarantees that you’ll never have to repay more than what your home is worth, in the event your loan balance eventually exceeds your home’s current appraised value. Thanks to the government insurance, you can rest assured that reverse mortgages are a safe financial product.

Still not sure? Take our quick, five-question quiz to assess whether you’re cut out for a reverse mortgage.

1. Are you (and your spouse, if applicable) 62 or older?

The federally-insured reverse mortgage program requires borrowers to be age 62 or older. In order to take out a reverse mortgage and remain on the home title, you and your spouse, if you have one, must both meet the age qualification.

2. Do you own your home outright, or own with a small mortgage balance?

The amount you can get from a reverse mortgage depends on a few factors, including your age, your home’s appraised value and the amount of equity you’ve built up, and current interest rates.

If you still owe a large amount on a “forward” mortgage, there’s less equity available for you to tap into. Conversely, if you own your home outright, you’ll have more equity to access.

3. If you do still have a mortgage, are you looking for a way to pay it off?

Are you are an older homeowner with an existing mortgage? A growing number of seniors are retiring with mortgage debt, according to a new report released by the Consumer Financial Protection Bureau.

Around 80% of people aged 65 and older are homeowners, but as of 2011, 30% of them were still carrying mortgages. Among homeowners age 75 and older, more than 21% still have mortgages.

Did you know you can use a reverse mortgage to pay it off and eliminate your monthly mortgage payments? The HECM program requires borrowers to repay any existing mortgage debt, but reverse loans do not become due and payable until you leave your home or pass away.

4. Are you planning on “aging in place,” and do you want to make any home modifications to achieve this goal?

A whopping 90% of people age 65 and older have indicated a desire to stay in their current home for as long as possible, according to AARP. If that describes you, a reverse mortgage could help you achieve your goal. Reverse mortgages can be used for funds to carry out certain home modifications to enable aging in place.

Remodeling to create a safer living environment could range from installing grab bars in strategic locations to creating low or no-threshold entries or even widening hallways and doorways.

5. Will you most likely be able to comfortably live in your home for the foreseeable future?

Like most financial products, reverse mortgages come with some upfront fees and costs. For many borrowers, the expenses associated with taking out a reverse mortgage are well worth it down the road. However, if you’re only planning on remaining in your home for a couple more years, or you think you may need to move soon because of health issues, then a reverse mortgage may not be the right fit for you.

If you answered mostly “yes” to the questions above, you may be a great candidate for a reverse mortgage 

Half of Americans Struggling to Afford Their Mortgages

June 4th, 2014  |  by Jason Oliva Published in News, Senior Housing

Americans have been struggling with housing affordability over the last three years, with 52% having to make sacrifices to cover their rent or mortgage, according to a recent survey.

Getting an additional job, deferring saving for retirement and cutting back on health care were just some of the sacrifices these struggling homeowners have made to afford housing, reports the “How Housing Matters Survey” conducted by Hart Research Associates.

The survey, commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation, represents a shift among Americans’ attitudes toward the overall housing market and how they view homeownership as a valuable investment. 

About 43% indicate it is no longer the case that owning a home is an “excellent long-term investment and one of the best ways for people to build wealth and assets.”

Additionally, more than half (54%) believe that buying a home has become “less appealing” than it once was, given the current market environment, while a similar proportion of adults (51%) believe that renting has become “more appealing.”

“The housing crisis that began more than five years ago has left an indelible mark on the attitudes and experiences of Americans,” stated Geoffrey Garin, president of Hart Research Associates. “Housing affordability has driven a large share of the American people to make significant financial adjustments.”

Driving these attitudinal changes is a growing perception that the aftermath of the housing crisis has yet to signal relief for a high proportion (70%) of Americans.

Of this group, 51% continue to believe the country is still in the midst of the crisis, while 19% believe that the “worst is yet to come.” 

The public in 2014 is only slightly more optimistic than it was a year ago, the survey notes, when 77% believed the nation was still in the grips of the crisis. 

“The continuing stresses felt by the vast majority of Americans in the aftermath of the housing recession are real and profound,” stated Jula Stasch, MacArthur’s vice president of U.S. programs. “It is clear that Americans believe more can and should be done to improve housing affordability for renters and owners, and that government should take action to invest in both equally.”

Written by Jason Oliva

Retire at 62????? Monte Carlo Scenario explains HOW

GOAL:  Retire at age 62

Profile:  US Citizen - Age 61.5 - Marital Status: Single -

Social Security Benefit: Earning Basis

Scenario 1: without reverse mortgage         Scenario 2:  with a reverse mortgage

Income total:                         $75,000             Income total:                  $75,000

1.  Salary (100% taxable)              75,000   1. Salary  (100% taxable)   $75,000

Begins at 61, ends at 62                                      Begins at 61, ends at 62

2. Social Security Monthly          1,222     2.  Social security amount    $2,141

FV 85% taxable                                                 FV 85% taxable

Annual increase                                   2%        Annual increase                      2%

Begins at 62, ends at 90                                   Beings at age 70, ends at 90

                                                                      3. Reverse Mortgage Monthy Amount

                                                                          (PV, 0% taxable)                       $1,223

                                                                           Annual increase                              2%

                                                                The income begins at age 62,ends at age 70

Expenses                               Annual Total            Assets

Housing                                             $7,800          Home value

Transportation                                     5,400         Mortgage or liens

Food, beverage, clothing,

personal care, cash                           9,900            Home equity  $0

Medical                                               7,200          Bank Accounts $0

Entertainment                                      5,900          Qualified Retirement Accounts   $300,000

Other                                                  1,300          Investment acounts                    $200,000

                                                                                  Total Market Value                 $500,000

                                                                              Liabilities: $0 Life insurance: NONE

                           Description            Required need      Desired Need             Total Need

RETIREMENT

Needs               Housing                       $8,034                       $0                           $8,034

                           Transportation              5,562                                                         5,562

                           Food, clothing etc     $10,197                                                    $10,197

                           Medical                           7,416                                                      7,416

                           Entertainment                     $0                  $6,077                        $6,077

                           Other                               2,575                                                     2,575

                           tax on prior yr returns   4,375                                                        4,375

                  TOTAL                                $38,159                  $6,077                      $44,236

Has objective been met?                            Has objective been met?

Scenario 1:  Without a Reverse                  Scenario 2:  With a Reverse

Based on the analysis of your retire          Based on the analysis of your retirement

ment income needs, expected                    income needs, expected income sources

income sources and available                    and available assets, your retirement

assets, your objective will be                      income objectives will be completely

will be satisfied until age until                    satisfied.

age 86.  At retirement, additional

funds of $50,386 will be needed.

Scenario 1 (without reverse mortgage): Has Objective been met?

Age     Total      Social        Additional    Needed        Required        Asset   (Shortgage)

             Needs   Security    Income       fm Assets    Distributions   WD      Unmet Needs

61     $47,100       $0          $47,100           $0                       $0                 $0            $0

62       42,738    12,321               0          $30,307                  0         $30,307             0

63       41,456    12,679               0            28,776                  0            28,776            0

64       45,502    12,933               0            29,569                  0            29,569            0

65       43,572    13,191               0            30,380                  0            30,380            0

66       44,665    13,455               0            31,210                  0            31,210            0

67       45,784    13,724               0            32,059                  0            32,059            0

68       46,927    13,999               0            32,928                  0            32,928            0

69       48,096    14,279               0            33,817                  0            33,817            0

70       49,290    14,564               0            34,725         17,801           16,924             0

71       50,645    14,856               0            35,789         18,479           17,310             0

72       52,036    15,153               0            36,884         19,180           17,704             0

73       53,466    15,456               0            38,010         19,900           18,111             0

74       55,070    15,765               0            39,305         19,855           19,450             0

75       56,722    16,080               0            40,642         19,714           20,928             0

76       58,424    16,402               0            42,022         19,457           22,565             0

77       60,176    16,730               0            43,447         18,974           24,473             0

78       61,982    17,065               0            44,917         18,417           26,500             0

79       63,841    17.406               0            46,435         17,578           28,857             0

80       65,756    17,754               0            48,003         16,512           31,490             0

81       67,729    18,109               0            49,620         15,181           34,440             0

82       69,761    18,471               0            51,290         13,535           37,755             0

83       71,854    18,841               0            53,013         11,516           41,497             0

84       74,009    19,217               0            54,792           9,056            45,736            0

85       76,230     19,602              0            56,628           9,025            50,603            0

86       78,517     19,994              0            58,523           6,025            31,499           0

87       80,872     20,394              0            60,479               0                     0          (24,620)

88       83,298     20,802              0            62,497               0                     0          (60,479)

89       85,797     21,218              0            64,580               0                     0          (62,497)

Scenario 2 (with reverse mortgage) Has Objective met?

Based on the analysis of your retirement income needs, expected income sources and available assets, your retirement income objective will be completely satisfied.

Age     Total      Social        Additional    Needed        Required        Asset    (Shortage)        

             Needs   Security    Income       fm Assets    Distributions   WD      Unmet Needs

61     $47,100       $0          $47,100           $0                       $0                 $0          $0

62       42,738         0             12,431       $30,307                  0         $30,307            0

63       41,456         0             12,679        28,776                  0            28,776            0

64       42,502         0             12,933        29,569                  0            29,569            0

65       43,572         0             13,191        30,381                  0            30,381            0

66       44,665         0             13,455        31,210                  0            31,210            0

67       45,784         0             13,724        32,059                  0            32,059            0

68       46,927         0             13,999        32,928                  0            32,928            0

69       48,096         0             14,279        33,817                  0            33,817            0

70       49,290    21,761               0           27,529         17,801             9,728             0

71       50,699    22,196               0           28,503         18,479           10,024             0

72       52,148    22,640               0           29,508         19,180           10,328             0

73       53,638    23,093               0           30,544         19,904           10,640             0

74       55,168    23,555               0           31,613         20,653           10,960             0

75       56,742    24,026               0           32,716         21,427           11,289             0

76       58,424    24,507               0           33,917         21,818           12,099             0

77       60,176    24,997               0           35,180         21,925           13,254             0

78       61,982    25,497               0           36,485         22,053           14,432             0

79       63,841    26,007               0           37,835         21,973           15,862             0

80       65,756    26,527               0           39,230         21,767           17,463             0

81       67,729    27,057               0           40,672         21,411           19,261             0

82       69,761    27,598               0           42,163         20,876           21,287             0

83       71,854    28,150               0           43,704         20,125           23,579             0

84       74,009    28,713               0           45,296         19,114           26,182             0

85       76,230    29,713               0           46,942         17,670           29,272             0

86       78,517    29,873               0           48,643         15,857           32,786             0

87       80,872    30,471               0           50,401         13,604           36,798             0

88       83,298    31,080               0           52,215         10,821           41,397             0

89       85,797    31,702               0           54,095           7,399           46,696    

Call Diane         0

Retire at 62? Monte Carlo scenario explains how!

GOAL:  Retire at age 62

Profile:  US Citizen - Age 61.5 - Marital Status: Single -

Social Security Benefit: Earning Basis

Scenario 1: without reverse mortgage         Scenario 2:  with a reverse mortgage

Income total:                         $75,000             Income total:                  $75,000

1.  Salary (100% taxable)              75,000   1. Salary  (100% taxable)   $75,000

Begins at 61, ends at 62                                      Begins at 61, ends at 62

2. Social Security Monthly          1,222     2.  Social security amount    $2,141

FV 85% taxable                                                 FV 85% taxable

Annual increase                                   2%        Annual increase                      2%

Begins at 62, ends at 90                                   Beings at age 70, ends at 90

                                                                      3. Reverse Mortgage Monthy Amount

                                                                          (PV, 0% taxable)                       $1,223

                                                                           Annual increase                              2%

                                                                The income begins at age 62,ends at age 70

Expenses                               Annual Total            Assets

Housing                                             $7,800          Home value

Transportation                                     5,400         Mortgage or liens

Food, beverage, clothing,

personal care, cash                           9,900            Home equity  $0

Medical                                               7,200          Bank Accounts $0

Entertainment                                      5,900          Qualified Retirement Accounts   $300,000

Other                                                  1,300          Investment acounts                    $200,000

                                                                                  Total Market Value                 $500,000

                                                                              Liabilities: $0 Life insurance: NONE

                           Description            Required need      Desired Need             Total Need

RETIREMENT

Needs               Housing                       $8,034                       $0                           $8,034

                           Transportation              5,562                                                         5,562

                           Food, clothing etc     $10,197                                                    $10,197

                           Medical                           7,416                                                      7,416

                           Entertainment                     $0                  $6,077                        $6,077

                           Other                               2,575                                                     2,575

                           tax on prior yr returns   4,375                                                        4,375

                  TOTAL                                $38,159                  $6,077                      $44,236

Has objective been met?                            Has objective been met?

Scenario 1:  Without a Reverse                  Scenario 2:  With a Reverse

Based on the analysis of your retire          Based on the analysis of your retirement

ment income needs, expected                    income needs, expected income sources

income sources and available                    and available assets, your retirement

assets, your objective will be                      income objectives will be completely

will be satisfied until age until                    satisfied.

age 86.  At retirement, additional

funds of $50,386 will be needed.

Scenario 1 (without reverse mortgage): Has Objective been met?

Age     Total      Social        Additional    Needed        Required        Asset   (Shortgage)

             Needs   Security    Income       fm Assets    Distributions   WD      Unmet Needs

61     $47,100       $0          $47,100           $0                       $0                 $0            $0

62       42,738    12,321               0          $30,307                  0         $30,307             0

63       41,456    12,679               0            28,776                  0            28,776            0

64       45,502    12,933               0            29,569                  0            29,569            0

65       43,572    13,191               0            30,380                  0            30,380            0

66       44,665    13,455               0            31,210                  0            31,210            0

67       45,784    13,724               0            32,059                  0            32,059            0

68       46,927    13,999               0            32,928                  0            32,928            0

69       48,096    14,279               0            33,817                  0            33,817            0

70       49,290    14,564               0            34,725         17,801           16,924             0

71       50,645    14,856               0            35,789         18,479           17,310             0

72       52,036    15,153               0            36,884         19,180           17,704             0

73       53,466    15,456               0            38,010         19,900           18,111             0

74       55,070    15,765               0            39,305         19,855           19,450             0

75       56,722    16,080               0            40,642         19,714           20,928             0

76       58,424    16,402               0            42,022         19,457           22,565             0

77       60,176    16,730               0            43,447         18,974           24,473             0

78       61,982    17,065               0            44,917         18,417           26,500             0

79       63,841    17.406               0            46,435         17,578           28,857             0

80       65,756    17,754               0            48,003         16,512           31,490             0

81       67,729    18,109               0            49,620         15,181           34,440             0

82       69,761    18,471               0            51,290         13,535           37,755             0

83       71,854    18,841               0            53,013         11,516           41,497             0

84       74,009    19,217               0            54,792           9,056            45,736            0

85       76,230     19,602              0            56,628           9,025            50,603            0

86       78,517     19,994              0            58,523           6,025            31,499           0

87       80,872     20,394              0            60,479               0                     0          (24,620)

88       83,298     20,802              0            62,497               0                     0          (60,479)

89       85,797     21,218              0            64,580               0                     0          (62,497)

Scenario 2 (with reverse mortgage) Has Objective met?

Based on the analysis of your retirement income needs, expected income sources and available assets, your retirement income objective will be completely satisfied.

Age     Total      Social        Additional    Needed        Required        Asset    (Shortage)        

             Needs   Security    Income       fm Assets    Distributions   WD      Unmet Needs

61     $47,100       $0          $47,100           $0                       $0                 $0          $0

62       42,738         0             12,431       $30,307                  0         $30,307            0

63       41,456         0             12,679        28,776                  0            28,776            0

64       42,502         0             12,933        29,569                  0            29,569            0

65       43,572         0             13,191        30,381                  0            30,381            0

66       44,665         0             13,455        31,210                  0            31,210            0

67       45,784         0             13,724        32,059                  0            32,059            0

68       46,927         0             13,999        32,928                  0            32,928            0

69       48,096         0             14,279        33,817                  0            33,817            0

70       49,290    21,761               0           27,529         17,801             9,728             0

71       50,699    22,196               0           28,503         18,479           10,024             0

72       52,148    22,640               0           29,508         19,180           10,328             0

73       53,638    23,093               0           30,544         19,904           10,640             0

74       55,168    23,555               0           31,613         20,653           10,960             0

75       56,742    24,026               0           32,716         21,427           11,289             0

76       58,424    24,507               0           33,917         21,818           12,099             0

77       60,176    24,997               0           35,180         21,925           13,254             0

78       61,982    25,497               0           36,485         22,053           14,432             0

79       63,841    26,007               0           37,835         21,973           15,862             0

80       65,756    26,527               0           39,230         21,767           17,463             0

81       67,729    27,057               0           40,672         21,411           19,261             0

82       69,761    27,598               0           42,163         20,876           21,287             0

83       71,854    28,150               0           43,704         20,125           23,579             0

84       74,009    28,713               0           45,296         19,114           26,182             0

85       76,230    29,713               0           46,942         17,670           29,272             0

86       78,517    29,873               0           48,643         15,857           32,786             0

87       80,872    30,471               0           50,401         13,604           36,798             0

88       83,298    31,080               0           52,215         10,821           41,397             

89       85,797    31,702               0           54,095           7,399           46,696             0