Invert Mortgage Pros Debunk Typical HECM Myths in Radio stations Shows

Advertising in nearby media outlets enables originators to market the benefits of reverse home loans to potential borrowers that are reading and listening within their areas of operations. So although some reverse mortgage professionals took to local newspapers as well as weekly print magazines to obtain their messaging out there, other people have turned to financial radio stations shows and podcasts inside their greater industry efforts in order to dispel misconceptions of the invert mortgage product.

For many loan companies, originators and brokers, creating a marketing strategy that is suitable for consumers' media preferences almost all revolves around the content messaging which is being delivered. TV marketing, while it might seem like the the majority of encompassing medium, can often be probably the most expensive.

In the reverse home loan industry, few companies possess the scale and financial means to rollout national TELEVISION ad campaigns like United states Advisors Group or 1 Reverse Mortgage-lenders who have provided famous faces to change mortgages over the last decade. However even celebrity spokesmen, because friendly and virtuous because they seem, have not been able to fully sway consumers, many of who still harbor misperceptions associated with what reverse mortgages tend to be, what they do, and above all else, exactly how these products can support them monetarily. And they might never have the ability to fully convince the public, possibly.

Capitalizing on the positive mainstream press attention reverse mortgages possess garnered in the aftermath from the Financial Assessment last year, and also the increased awareness from the monetary planning community, some business professionals have recently made an appearance in local radio sections and podcasts to promote the benefits of reverse mortgages and also remove the veil of falsehoods that has long plagued the house Equity Conversion Mortgage (HECM) product.

"One of the stuff that people are surprised to understand regarding reverse mortgages is that it is not that different than some other mortgages-it's just that they've received a bad rap, " stated David Holland, a Florida-based certified financial planner (CFP), who also hosts the weekday radio program "Real Money" airing in Flagler County, which is included in the Deltona-Daytona Beach-Ormond Beach, Fla. local area area.

In a recent Real cash show, Holland chatted along with industry veteran and Seat of the Funding Longevity Job Force Shelley Giordano to be able to "untangle" reverse mortgages, having a discussion that included current changes to the HECM system and the various uses of those financial planning tools.

"The big, big thing about opposite mortgages-part of the value of any reverse [mortgage] is you don't have to make charges or principal payments, " Holland said during the display. "That's a huge advantage on the traditional mortgage for the correct situation. "

A exercising financial planner going on 2 whole decades, Holland admits that he continues to be reluctant to introduce customers to reverse mortgages during the past, however , continuous inquiries concerning reverse mortgages led your pet to begin researching HECMs. It had been only after learning about probably the most recent HECM rule modifications, and seeing how a slow mortgage can be incorporated right into a financial plan, that transformed Holland's mind.

"And therefore I'm now licensed to perform reverse mortgages in the circumstances where it makes sense, " this individual said.

Holland is an sort of the slow, but constant change of heart which has been occurring among the financial preparing community over the past year, adopting the implementation of the Financial Evaluation and the series of retirement investigation that has strengthened the trustworthiness of reverse mortgages since viable retirement income organizing tools.

"What sort of obtained the ball rolling for [financial] advisers and academicians to start looking at weaving real estate wealth into a retirement strategy is the notion that when your own portfolio is suffering, the very last thing you want to do is begin marketing out of your portfolio at a loss, " Giordano said during the A real income segment. "If you can replace using your housing wealth within scenarios of extreme volatility, the mathematics is really clear that this may be the way a portfolio may have the best chance to survive a lengthy retirement. "

Despite the good press and financial analysis, a pervasive lack of recognition continues to hinder reverse mortgage loans from greater utilization, amongst both consumers as well as other economic professionals.

"I think that those who are working with financial planners are usually starting to see in customer media this discussion about how exactly you can weave-in reverse residence and housing wealth within your retirement plan, and have a far greater outcome for your retirement, " Giordano said. "We make progress, but it has been slower and painful. "

Probably the most prevalent misconception of invert mortgages continues to be the idea that debtors relinquish ownership of their houses when they obtain a HECM, based on Candy Watson, reverse mortgage loan consultant with Senior Reference Alliance, who recently came out on the "Aging with Energy: From Womb to the Tomb" podcast from Calif. -based Santa Clarita's Hometown Train station AM-1220 KHTS.

"A large amount of people still say, 'oh, you're just going to get my home, '" Watson said during the podcast. "No, they are not going to take your house. You retain ownership from it. You're on title, not really the mortgage company. "

Throughout the Aging with Power section, which also featured a house health provider guest, Watson and host Myles McNamara discussed the differences between change mortgages, traditional mortgages along with home equity lines of credit; along with certain HECM features, such as the benefits of the mortgage insurance coverage premium and nonrecourse supply.

"I really feel it [reverse mortgage] is definitely an option seniors should be informed on, " Watson mentioned. "Whether they pick this or not, the choice is always as much as them. There's no stress. "

"The people who will be really helped by a reverse loan are the salt of the planet, middle-America folks who have some cash set aside in their IRAs or even 401(k)s and have Social Protection, " Giordano said. "Those are the folks who are trying to discover a way to make sure their nest ovum is going to survive a 30- or 40-year retirement. "

Could New Research Change Financial Planners’ Views of Reverse Mortgages?

While financial planners have not traditionally been major proponents of reverse mortgages in their planning advice, an effort rising among investment advisers in Texas could change all that. The HECM Saver, they say, is the bridge to the gap between reverse mortgages and long-term financial planning.

"Before the HECM Saver came out, financial advisors had a negative view of reverse mortgages," says John Salter, Texas Tech professor and wealth manager for Evensky & Katz Wealth Management. "They treated them as a last resort." Now, however, financial planners should consider the benefits of the HECM Saver and the reverse mortgage generally in retirement planning, Salter says.

"It's money sitting on the table."

The Saver presents an opportunity for retirees to draw cash when their other investment sources are not performing as well, without the upfront costs that a HECM Standard includes. Because of the low fees associated with the Saver, the cost is now worth looking at as a mainstream recommendation, Salter says.

"it's not rocket science," he says. "It's going to result in a better scenario. This shouldn't be a surprise to anybody. If you can tap into the value of a home, you're going to be better off.

While Salter is still mum on the research findings, he says the research―when published in the coming weeks―should have widespread implications for the use of reverse mortgages.

"The takeaway is that for advisors, anybody should think seriously about utilizing the value of the reverse mortgage." The research coming from Texas Tech's division of personal financial planning will be put into the advisors community, he says, and should get a lot of press for it. Until then, the anticipation grows.

"It's like hearing about a drug that hasn't made it through FHA testing yet," Salter says.

Harold Evensky, co-founder and president of Evensky & Katz, has also been active in the education and research process.

"It looks like this is going to be an immensely powerful tool," Evensky said of reverse mortgages in a July edition of Advisor Perspectives Newsletter. The article noted that Evensky is advocating the use of standby reverse mortgages as a way for clients to create additional "standby" liquidity, analogous to a home equity loan.

The impact of a change in financial planners' attitudes could be significant for reverse mortgage providers.

As a fee-only investment advisor, those like Evensky & Katz must refer clients to others for reverse mortgages, since they don't take part in the sale of any products. That means referrals for lenders. And with the support of Evensky, a well-known fiduciary financial planner, Salter says, others are bound to listen.

"For him to say this is something we should look at, it's going to make an impact," Salter said.

The actual Mortgage Professor: Do invert mortgages work for owners of pricy homes?

As a federally covered reverse mortgage program under the actual Federal Housing Administration, the house equity conversion mortgage system is not designed to help the rich. In calculating maximum attract amounts, the highest property worth it will recognize is $625, 500. If your house may be worth $1 million or 10 dollars million, you can't draw more than amounts available on a home really worth $625, 500. Further, even though higher value properties slow up the risk of loss to the FHA, the mortgage insurance high quality is the same for a house worth $1 million and another worth $625, 500.

That is not mean, however , that proprietors of pricey homes can not use the HECM program for their advantage. They can, and I will explain how in this article.

The important thing question, which is the same for many senior homeowners, is whether the particular withdrawable amount available on a good owner's house can make a substantial improvement in her lifestyle. When the answer is yes, the situation for the HECM is as powerful when the house is worth $1 million as when it is well worth only $625, 500. This is because the owner of a pricey house, that has excess equity upon getting into the program, will retain this when leaving the program, whether or not by selling the home, relocating of it permanently or perishing.

An owner with extra equity whose intent would be to leave the equity on her estate, can do exactly which. What she cannot perform is convert all collateral into spendable funds on her own use unless the girl decides at a future time for you to downsize by selling the girl existing house and settling the HECM. She may then buy a less-pricey house with an all new HECM, converting the excess value into investable funds.

Listed below are three examples of 65-year-olds searching ahead 12 years who use a million dollar home but have various needs.


Sam is actually 65 with a home worthy of $1 million that has a superb mortgage balance of three hundred, 000. His objective is always to rid himself of the payment by paying off the balance using the HECM, while retaining because his equity as possible. The particular HECM he selects through among those posted by loan companies on my website is an flexible with an initial rate of two. 975 percent and application fee of $3, five hundred. This combination of rate as well as fee will result in the lowest HECM debt after 12 years, that was his target period.

Sam's equity after 12 years may be the value of his home when this occurs less his HECM financial debt. Assuming an annual appreciation price of 4 percent, that is the figure that the Oughout. S. Department of Real estate and Urban Development utilizes in calculating draw quantities, Sam's home will be value about $1. 6 mil. His HECM debt is going to be anywhere from $532, 000 when the initial rate of 2. 975 percent remains unchanged with regard to 12 years, to $884, 000 if the rate immediately leaps to the maximum of 7. 975 percent. Sam's estimated fairness, therefore , will be somewhere between $717, 000 and $1, 072, 000. This is the amount Mike would realize if this individual sold the house and cleared the HECM at age seventy seven, and it is also the amount that could go to his estate in case he died at that age group.

Let's now assume that Ted is alive and kicking at seventy seven but no longer needs the home with the HECM. As is the truth with many seniors, he desires to downsize. So he offers the house and pays off typically the HECM, realizing (on probably the most conservative assumption) about $717, 000. If his brand new house costs $600, 000, he can draw about $358, 000 on a purchase HECM at age 77, and will spend the balance of $242, 000 out of his sales profits. That would leave at least $475, 000 for investments.


Sue selects an adjustable HECM at 4. 725 % with a $6, 000 origin fee that offers the largest period monthly payment - one that continues as long as she lives in your house - of $1, 844. Sue uses less money than Sam over more than a decade because her draws tend to be spread out over the period instead of upfront. Her equity in late the period is between $1 million and $1. two million. Sue has the exact same option as Sam in order to downsize by paying off often the HECM and taking out another to purchase a less costly house.


Sheldon selects exactly the same HECM as Sue since it generates a larger credit line more than 12 years than any of the some other available HECMs. The line in those days will range from $671, 000 to $1, 113, 000, depending on what happens to his HECM interest rate. This is the amount Sheldon will be able to draw in order to purchase income-earning assets. After this pull, Sheldon would still have collateral of from $451, 000 to $908, 000. Just like Sam and Sue, Sheldon could also downsize if which was where he wanted to proceed.

In sum, seniors along with houses worth more than $625, 500 retain their excessive equity when they take out the HECM reverse mortgage, and when they decide to downsize at some time, they can convert the value into investable funds. Absolutely no two seniors, of course , are usually exactly alike, and each needs a plan that is hand-tailored with their needs, their preferences and the outlook. My HECM loan calculator was designed for that objective.

Comes to an end Round-Up: Research Links Change Mortgages to Financial Happiness

Here we are at one more thing Friday. The weekend is merely a few hours away, but before an individual take off, check out what took place in reverse mortgage news the 2009 week:

New Research Backlinks Reverse Mortgages to Economic Well-Being-Senior homeowners can utilize their home equity in a variety of techniques, whether that means taking a opposite mortgage, a home equity personal credit line (HELOC) or cash-out refinance. But when it comes to deciding in between these different extraction strategies, reverse mortgages can have a good impact on financial well-being involving borrowers, according to the results of a current study from Ohio Express University.

Ain't No Relaxation for Reverse Mortgages: Market Gasps for Breathing Room-When the Financial Assessment had taken effect April 2015, the particular consensus was that much in the criticism and negative click that have historically plagued slow mortgages would be laid to sleep. And while press coverage given that then-for the most part-has looked at reverse mortgages through an perhaps more positive lens than that did in the past, the image remodeling hasn't translated into a great uptick in loan originations.

As Reverse Mortgage Quantity Tightens, These Markets Are usually Letting Loose-As far since reverse mortgage volume can be involved in 2016, the industry will be on track to see one of the smallest years for endorsements current history. Although constrained quantities have plagued many of the nation's top-producing markets nationwide, other places continue to demonstrate their resiliency to the widespread declines.

Calif. Reverse Mortgage Lender Sets Scenery on National Expansion-One California-based mortgage lender is embarking on any national expansion of their reverse mortgage operations and also plans to use technology to aid broaden its footprint. That will company is New Us Funding, a full-service mortgage company headquartered in Tustin, Calif., which recently expanded it has the reverse mortgage division to be able to serve all 47 declares in which the company is licensed to use.

Why Financial Advisors May choose to Revisit Reverse Mortgages-Financial consultants have been long skeptical connected with reverse mortgages due to identified high risks involved for clients, but with recent becomes the program and application method, it may be something to review.

ten pros and cons of a reverse home loan

Reader Question: Reverse home loans, good or bad. What to expect and avoid. I'm 81; it can our primary residence, absolutely no mortgage - free as well as clear. We have a $1 million second home which will go to our kids who each are well off. We only want to use some of our equity with regard to travel. Your thoughts? - Steve P.

Monty's Answer: There isn't enough information about your personal conditions to comment on whether a House Equity Conversion Mortgage is better for you. Federal law needs mortgage lenders to lend cash to all consumers, even all those in "protected classes, inch one of which is age. Therefore it is likely you are eligible for the actual HECM mortgage if you be eligible.

Primary structure of the HECM

» Loan-to-value ratio is leaner than conventional loans simply because income is not required.

» Both husband and husband or wife must be 62 or old.

» Must attend a fiscal counseling session to demonstrate an awareness of the loan.

» Whenever you move out or sell the home, you must repay the interest and also principal on the loan.

» The property must be kept within good repair or danger foreclosure.

» Insurance along with property taxes must always become current or risk foreclosures.

» If certain health issues exist 12 months or lengthier, the lender can call the particular loan.

» If the home is in your name whenever you die and the loan is actually underwater, you protect your own estate against loss for sale over and above the interest and primary.

» Verification of earnings, assets, credit history and month-to-month living expenses is necessary.

About HECM products

There are three various sources of the HECM. Financing product developed by a private loan provider, a local government agency or even non-profit organization, and the Government Housing Administration. There are also 3 different types of HECM loans. The total amount one can borrow with FHA depends on the age of the most youthful borrower, the current interest rate along with a formula involving the $625, five hundred maximum loan, the evaluation and the sale price of the house (if you are buying down). A private product may have cool features.

Never having obtained typically the HECM as a disclosure, the good qualities, and cons of the HECM product are:


one Borrowing against your collateral only.

2 . No monthly installments.

3. Disbursement is not taxable.

4. Funds can be disbanded monthly, lump sum, or via a line of credit.

5. Income not really a factor.


1 . You might be borrowing money which could impact individual government programs.

second . You cannot deduct interest unless you pay off the loan.

three. Lender closing costs and costs are higher than traditional financial loans.

4. Retain typical home owner expenses as insurance, resources, real estate taxes, HOA charges and more.

5. The financial loan is complicated, which is why guidance is required. Complex loans provide themselves to misunderstandings as well as fraud. Here is an article which ran in the Wall Street Journal a few years ago. This link to analysis Trade Commission article offers additional information including how to spot frauds and high-pressure tactics.

From the brief description, it is possible you might have other alternatives that might accomplish your travel goals without needing the HECM. Consider beginning a conversation with your registrar, if you have not done therefore already. Estate planning ideas might offer other options, such as some loan towards assets such as stock, provides or IRAs. Another option might be selling some of those same loge.

Consider investigating the concept of mature living communities. They include different ideas, price ranges in addition to amenities, and many seniors find it that fits into their lifestyle. The following is an article about senior residing you might find helpful. Your current real estate situation is not clear within your question, but depending on the associated with your home, you might be able to market your current home and buy an inferior home. Here you increase free cash and have simply no loan. If you chose to lease instead of buying a smaller house, you would have even more funds to travel.

Reverse mortgages aren't for everyone

The perfect fit for any reverse mortgage is an more mature senior whose retirement system has gone sour; their partner has passed away, and a requirement for some limited health care support in the near term. That they had depleted their funds, as well as death and illness possess cut into the Social Protection income. All they have remaining is the equity in the house. The reverse mortgage allows often the surviving spouse to live in their house for a significant period. The majority of seniors prefer “aging in position. ”

Mortgage loan Rates Strikingly Subdued Around 39-Month Low

Freddie Macintosh personal computer published its weekly countrywide average 30-year fixed charge Thursday, which inched to three. 45 percent, up only two basis points (0. 02%) from the week previous.

Rates are holding to a ultra-tight range, varying just simply 0. 07% in the past more effective weeks.

That's good news intended for home buyers and replacing households. Rates have been sluggish to increase, despite signs of energy within the U. S. overall economy. Typically, rates rise using robust job growth, while was reported in June.

But rate increases have got remained strikingly subdued. Property buyers still have a chance to now you should a mortgage rate that was not around since early 2013, more than 39 months before. And, over 8 thousand homeowners are now "in typically the money" to refinance.

It can be the ideal time for home mortgage buyers to secure a low, long-term price that will contribute to their homeownership and wealth-building goals.

Simply click to see today's rates (Aug 11th, 2016)
15-Year Repaired, 5-Year ARM Rates Keep Low, Too

Each week, authorities agency Freddie Mac research 125 banks for its Major Mortgage Market Survey (PMMS), a recap of the existing "going rate" for three frequent mortgage loans.

The survey addresses the conventional 30-year fixed-rate home loan, 15-year fixed-rate mortgage, along with 5-year adjustable-rate mortgage (ARM).

Mortgage rates rose for those three products this week.

30-year fixed-rate mortgage: 3. 45% with 0. 5 discounted points
15-year fixed-rate mortgage loan: 2 . 76% with zero. 5 discount points
5-year ARM: 2 . 74% having 0. 5 discount items
Note that these rates are usually quoted including "discount points" which are fees that immediately drive down the interest rate. Any zero-closing cost mortgage, as well as one that includes closing fees but no points, can come with higher rates.

Regardless of whether you choose to pay points not really, your rate is likely to be below if you purchased or refinanced a home one year ago.

That kicks off in august 2015, the 30-year regular mortgage rate averaged 3. 94%. This year, the rate is along by nearly one-half of 1 percentage point. Home potential buyers can afford an eight per cent bigger home price this coming year, for the same monthly cost.

Fifteen-year fixed rates are decrease big too, as are 5-year adjustable rate mortgages.

In 2009, the 15-year mortgage were included with a rate well above a few percent. The 5-year PROVIDE sat at 2 . 93% -- not a bad level itself, but one that loan shoppers today can undercut.

No matter which product today's homes choose, low rates can be attainable. This is opportune the right time for anyone thinking about a home obtain or refinance.

Click to view today's rates (Aug eleventh, 2016)
Freddie Mac Tells Low Rates, High Household Demand Through 2017

Existing mortgage rates are very low, and Freddie Mac tells low rates for some time ahead.

In a recent outlook review, the agency predicts prices will stay at or under 4% through 2017, citing Britain's vote to exit europe, coined "Brexit", plus additional economic headwinds.

Low costs will lead to tough levels of competition for homes, says the organization, especially for first-time home consumers looking for housing in an low cost range.

And things may get even more challenging in 2017.

As rates drop, Freddie Mac predicts a stir of home buying activity. Reduced rates are making it less costly to buy than to rent.

Buyers expect their rent to elevate nearly twice as fast seeing that home prices. This will initiate more renters to seriously take into account owning a home, if to get no other reason, to control their particular costs.

After all, a 30-year fixed mortgage locks inside your housing costs for a very long, long time.

There are simply not plenty of reasons for nonowners to remain thus. Renters who have contemplated getting should consider moving up their period of time to secure a home purchase.

Several low- and no-downpayment mortgage programs can help them do that very effectively.

The USDA home loan was created to spur homeownership in less-dense areas, therefore is available by buyers in these regions. It needs zero down and minimal mortgage insurance. Plus, home finance loan insurance for these loans is usually dropping in October 2016.

Another zero-down option will be the VA home loan, reserved specifically for past and current military service persons. This specific loan comes with the lowest charges of any loan plan.

The FHA loan is definitely fantastically popular, especially between today's younger buyers, who also use the program 40% of that time period. It requires just a 3. five per cent downpayment. Home buyers can easily qualify with no traditional credit score or score whatsoever.

Naturally , there are conventional loans, that make up a majority of the market. Fannie Mae, and the publisher in the weekly survey, Freddie Apple pc, write rules for typical loans, and lenders in addition to mortgage companies across the country agree to them.

Even these organizations, which are thought of as conservative, offer you low-downpayment options. For instance, often the HomeReadyTM program requires several percent down and revenue from household members will be regarded, even if they are not on the application to borrow money.

The right loan program will depend on your situation, but the important things is always to take the opportunity to purchase a residence using one of the programs, just before home prices -- or perhaps rates -- rise an excessive amount of.

What Are Today’s Rates?

Regular rates as reported by Freddie Mac are just that: regular. You may qualify for an even reduce rate depending on your credit account, downpayment amount, and college loan program.

Get a rate estimate and lock in today’s fees. No social security number is required to commence, and all quotes come with instant results to your live mortgage fico scores.