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Deborah Nance - Reverse Mortgage Consultant in Southern California

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Financial Planner in Upland with a great business card - Check it out.

03-12-12
Deborah Nance - Reverse Mortgage Consultant in Southern California

Clients looking for a smart, hardworking financial planner in Upland will find him right here.

I thought my Realtor associates were clever with their marketing and branding, but this is the best business card I’ve seen!

I met Josiah Salser because he was doing some research on Reverse Mortgages in order to help guide his clients on the mortgage structuring part of their financial picture. He found me through my AR “Outside Blog” and also on LinkedIn. Being the proactive sort of guy that he is, he contaced me through LinkedIn, and we wound up setting up a face to face meeting at a local Starbucks. When I asked for his business card he handed me this:


Financial Planner in Upland

It looks just like a miniature manila file folder and I thought it was brilliant! We spent the better part of two hours discussing multiple ways that we each try to help our clients navigate retirement. I work with clients who are of retirement age. Josiah works with clients of all ages and specifically likes to help business owners of small to medium companies provide plans and solutions for themselves and their employees. Those planning ahead, those navigating the current retirement waters, and those already retired who are overdue.

Financial Planner in UplandI enjoyed meeting Josiah today and his business card was so novel, that I know I’ll never forget him! What does your business card say about you?

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Cerritos Reverse Mortgage Question - What’s the Loan To Value on a Reverse Mortgage?

01-28-12
Deborah Nance - Reverse Mortgage Consultant in Southern California
Sunset CruiseCerritos Reverse Mortgage Question - What’s the Loan To Value on a Reverse Mortgage?

I get this question all the time. I know that most folks are hoping to hear a number from me like 60%, 80% even 100% of loan value, but that’s just not the way it works.

The loan amount (or principal limit) on a reverse mortgage is based upon a formula provided by HUD which factors in three elements: AGE, HOME VALUE & EXPECTED RATE.

AGE - The age of the youngest borrower is used in the formula as a factor. All borrowers must be over 62, but an older borrower will qualify for a higher loan amount than a younger borrower.

The reasoning for this is based upon life expectancy. A younger borrower needs a bigger cushion of equityto allow for the eventual repayment of the loan.

HOME VALUE - The higher the loan value, the higher the loan amount up to and including a maximum home value of $625,500. This doesn’t mean if your home is worth more you can’t get a reverse mortgage. It just means that if you are getting a HECM the calculations will be done as if your homes value was $625,500. If your home is worth considerably more than that you may want to research a Jumbo Reverse Mortgage which offers many of the same features and protections of the HECM.

EXPECTED RATE - Not the interest rate on the loan itself, the Expected Rate is just that, what the borrower can “expect” the interest rate to average. Easy to figure on the fixed rate reverse as it matches the interest rate on the loan. It’s a bit more complex on the adjustable. The expected rate for an Adjustable HECM is figured on the 10 Year Libor Swap and the Interest on the loan is figured on the 1 Month Libor index.

I hope that you found this information helpful! Here’s how to get your own Reverse Mortgage Information Kit.
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Irvine Reverse Mortgage Story

11-30-11
Deborah Nance - Reverse Mortgage Consultant in Southern California
Dalmation DivaSavvy Senior Uses Reverse Mortgage

I was fortunate to recently work with a senior who was very strategic and smart about using her home equity. This 82 year old was as sharp as they come, highly educated and in the financial field. She needed to access $300,000 for a short period of time (less than a year) and didn’t want to withdraw funds from retirement accounts, IRA’s, CD’s and the like. So she looked into the new HECM SAVER.

Things she considered:
  1. Upfront Fees - Much lower on the SAVER
  2. Interest Rate - Lower on the Adjustable
  3. Available Funds - SAVER provided plenty for her needs and using the ARM allowed her to only access the amount she needed.

Because she lived in a high value home worth over $800,000, she was able to qualify for $344K in funds with zero origination fees, zero upfront Mortgage Insurance Premium. In about six months she will repay the reverse mortgage down to a very small balance to keep the equity line available should she ever need access to it. (No prepayment penalties on a HECM Reverse Mortgage)
Here is a snapshot of what she did.

  • $800,000 Home Value
  • $344,000 Appx Available Loan based upon Age, Interest, Lending Limit
  • $ 2,400 Closing Costs
  • $ 0 Payoff Current Mortgage
  • $341,600 Available Loan Proceeds
  • $300,000 Lump Sum Disbursement to her Checking Account
  • $ 41,000 Line of Credit

In six months, when she is ready to repay the loan, I advised her to just pay the loan down to a very small balance. (If she completely pays it off that will close the loan) Since the loan is an “Open-Ended” loan if she just pays it down her line of credit will correspondingly increase. That increased line of credit can be used in the future for unexpected financial needs that may come up (Medical Expenses, In Home Care, Other Needs)... or she may never need it. The carrying costs on that paid down loan would be very small. In my personal opinion this is a great example of a strategic use of of an HECM SAVER Adjustable by a savvy Senior!
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Anaheim Reverse Mortgage Question - Spouse Too Young For A Reverse

11-13-11
Deborah Nance - Reverse Mortgage Consultant in Southern California
My spouse is not 62 years old yet - can I get a reverse mortgage?

That is an important question. Technically, if your spouse is willing to go off of title you could get a reverse mortgage, but it is rarely, if ever a good idea.

Why? The answer is simple. When the borrower on a reverse mortgage no longer lives in the home due to death, illness or sale, the loan becomes due and payable. As the elder spouse if you should die first, your partner would then have to figure out a way to payoff the loan. How would he or she handle that obligation? Would they have a large inheritance from you that would be enough to payoff the loan or would they be facing foreclosure and eviction. That’s the dilemna you could be placing them in if you chose to proceed as the sole borrower and asked them to deed their interest in the property to you. I don’t think that is ever a good idea even if it means more money now - and I recommend you talk with a knowledgeable, expert financial advisor or attorney. When a borrower is married, both spouses may be required to receive HECM Counseling even if one of them is currently not on title or planning to go off of title.Caution

It is always imperative that you understand the obligations and terms of any real estate loan that you wish to become obligated to. Don’t be shy about asking hard questions and make sure you understand your responsibilities completely. Don't be rushed, and deal with a professional, ethical reverse mortgage professional.
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Huntington Beach Reverse Mortgage Question - My Parents Have a Reverse Mortgage ...?

10-11-11
Deborah Nance - Reverse Mortgage Consultant in Southern California
I had two phone calls today from family members of reverse mortgaged senior homeowners. One found me through my blog here and the other from a mutual business acquaintance. These two calls have me writing today about some things that borrowers and their families should know.

First

I know you don’t tell your parents everything and guess what? They don’t tell you everything either. But I think it ‘s a good idea for someone that the senior knows and trusts to understand the reason the senior has taken the reverse mortgage and what happens when the loan comes due. The house belongs to the homeowners, not the kids, but when mom and dad pass away, it can be confusing and frustrating for the heirs if they have no idea what happened and are not prepared.

DeedIf they already have a reverse mortgage, they should not “deed” someone else onto title with them (like one of the kids). Technically it can be done - but it could be considered a default action on the reverse mortgage causing the loan to become due and payable.

Not to mention, you could really mess up title to the property. Preparing a deed is serious business, not one that should be done lightly. You should contact a real estate attorney to review the terms and condition of any liens or agreements currently affecting the property, to review and counsel you on the tax and estate ramifications of being added on title and to prepare the deed properly.

Second

If your parents have a reverse mortgage ask them if they are both on the loan. If not you need to have a plan because once the last remaining “borrower” passes away, the loan will become due and payable, will the younger spouse have the funds to repay the loan? Perhaps they have a plan already in place, maybe she has a large life insurance policy on the old guy. That would be great.

Sometimes the younger spouse will have gone “off of title” in order for the older spouse to get a higher loan amount. In the situation I came across today, they did just that and if they hadn’t they would not have gotten enough money from the reverse to payoff their subprime, adjustable, negatively amortizing loan that they couldn’t afford. It would have been worth it for the family and everyone’s peace of mind to come up with another solution at the time they were taking the reverse mortgage.

Possible alternative solutions:

1. Instead of taking out a reverse - sell the home and move to a more affordable apartment. The market was much better then and they could have gotten a lot more on their home.

2. If the children wanted to keep the home in the family, perhaps they could have purchased it from the parents and then rented it back to them.

3. Take the reverse in both spouses names since the younger spouse was over 62 and when the loan proceeds were not sufficient to payoff the existing mortgage - the family members could have gifted the shortage amount to the senior couple. This way either spouse could have remained in the home without the loan becoming due and payable at the death of the other.


I think reverse mortgages are a wonderful financial tool for seniors who want to age in place in a suitable home. I don’t think they are for everyone, but I do think everyone should know and understand them.
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