What’s Wrong with Reverse Mortgages?

Over the last 30+ years, I have been providing 3 types of financing to clients… Residential Financing, Commercial Financing and Reverse Mortgage Financing.

In that time, I have seen all 3 improve and evolve but the one category that has improved the most is Reverse Mortgages.  In the past, when a customer applied for one, they were really throwing the dice, so to speak, on what they would end up paying rate and fee wise, what they were told from the lender and the worse part, what they signed often relinquishing the rights of the property to the lender…Yes you heard right.  If the borrower passed away, the lender kept the house (if your parent or loved one has one from 10 years ago or longer, have them review their promissory note for such language and if applicable, refi out of it!).

Today, Reverse Mortgages are a Different Animal, so home owners 55 and above in age can enjoy their home, age in place, even if they don’t have the income to afford their home, just as long as they have enough equity in their home.  In addition, 10 years ago, it was commonplace, to see closing costs on reverses equal to $10k or 20k (or higher) and today on a Jumbo reverse they can cost $1000 to a max of $9000 depending on the rate and program chosen (most of ours are around $4k to $6k).  Lastly, today the home is yours when you sell, not the lender.

Before a client can even start a reverse mortgage application they must sit down with a qualified individual like myself and review their options, pros and cons and then take a mandatory (online/over the phone) class.   Then after a 7 business day cooling off period are they able to proceed with the application.  Lastly, while they have improved exponentially, there are some things to still consider.

You’re retired! The stock market just had a major correction (q1 and q2 of 2022) and your wondering if you have enough money to live on, long term?  Often times a Reverse Mortgage is exactly what you need as it eliminates:

– Mortgage Payments
– Monthly Medical Costs
– Credit Cards and Installment Debts

So…What’s Wrong with a Reverse Mortgage?

A Few Things…

– A Band-Aid…Really?  They can be Band-Aid to a more pressing issue in relationship to one’s Burn Rate or Lifestyle!
– Expensive…They can be Expensive, especially if you don’t spend the time to educate yourself on them and compare one option to another!
– They Can Take a While to Close. Don’t Wait until you Run Out of Money to Get one, Plan Ahead!

For more information, please contact me.  Thanks.

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014

CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

Rob’s Report – Covering the Market, Why a Heloc May Not Make Sense and How a Concurrent Closing May be A Great Solution in Buying in Today’s Market…

It’s been some time since I sent out a newsletter on rates, the market and food for thought in the world of real estate…

What’s prompted me to send a report now has a lot to do with rising home inventory, rising interest rates and the Dow Jones, down by 11.32% year to date currently resting at 32,654 down from 36,799 back on January 4th.

About RATES…

First a foremost as we have seen rates increase from 2.75% in December of 2021 to 4.75 (and higher) to date with only a .75 increase in rates by the Federal Reserve, the Federal Reserve is expected to increase rates 4 more times pushing Prime from a current 4% to 6% in the future and who knows how much higher residential, commercial, and reverse rates will go.

About HELOC’s…

With rising rates, why would a consumer choose a HELOC for cashout over a fixed rate 1st, when HELOC’s can only keep pushing up in rate as most of them are tied to Prime plus a 1 Margin or as of today, 5%.  If the Fed continues with what they said, then a HELOC’s future rate, will be closer to 7% in the near future based on what they are predicting.  In summary, why not lock into a fixed rate now?  In addition, there are some things to consider on why a HELOC may not make sense:

  • Were in a rising rate climate with prime now at 4% plus a margin of 1 (or higher) resulting in a rate of 5% or higher in rate
  • Due to changes in the tax code back in 2018, one cannot write off HELOC’s or 2nd’s, interest wise.
  • Due to their volatility…In the past if property values dropped, HELOC lenders would cut the “line” amount or freeze the account all together.

If you’d like to look at a 1st mortgage refinance, please complete the following…

https://101loan.com/refinancing/

REVERSE MORTGAGES’s…

With rates climbing, home values potentially leveling out and the Dow Jones down by 11% in 2022, much of what we have seen ever 10 years seems to be starting over again and consumer confidence is dropping.  If your over 55 years of age and have at the least 45% equity in your home, you might want to consider the benefits of a fixed rate reverse mortgage.  To determine your options without running credit, please go to https://101loan.com/reverse-mortgage-start/ and complete and we will research your options and provide them to you.

CONCURRENT CLOSING’s and Their Benefits…

If your thinking of buying a home and bridge options don’t work for you at https://101loan.com/blog/do-you-want-to-buy-first-and-then-sell-later-bridge-financing-may-be-the-answer/, you might consider a concurrent closing based on the following steps:

  1. Get pre-approved based on selling current home.
  2. Start looking at new homes and list your current home.
  3. Accept an Offer with a flexible long closing and with a flexible long rent back after you close.
  4. Make a contingent offer or no contingent offer depending on when your closing date is on selling.
  5. Close on the home you are selling and then close on new home or concurrently close at the same time.

Since the market is still strong and more inventory comes on each day, this is a solution you may want to consider as the incredible savings compared with any of the options in the above lin

If you would like to purchase or refinance a property or obtain a reverse mortgage and rid yourself of mortgage payments, 

BTW…To Learn More About Inflation and the Market, go to here.

Best Regards,

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014. CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

Note: Interest rates and loan programs quoted are subject to change without notice or until locked and approved by lender.

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Navigating Forward & Reverse Mortgages for Senior Homeowners (60+)

Are you over 60, own a home and would like to eliminate your monthly mortgage payment and do the following?

  • Pay off the Current Mortgage

  • Pay off Monthly Debts

  • Obtain Monthly Income

  • Pull Cash Out to Invest

  • Pay Medical Expenses

  • Renovate your Home For “Age in Place”

  • Get Cash or a HELOC for a Rainy Day

We offer every type of Reverse Mortgage and can help a homeowner (that is 60 years of age of older) determine if a Reverse Mortgage is right for them.

To Determine Your Options, Please Complete the Short Questionnaire at:

https://101loan.com/reverse/

Please also note, we have been in the business of helping clients for over 30 years and have over 200 “5 Star” Review on Yelp. Be assured we will go out of our way to ensure you make the right financing choice, keeping in mind your long term goals and short term needs.

If you’d like to learn more, check out our video or contact us for more info.

What is a Reverse Mortgage?

What is a Reverse Mortgage?

When you hear the word mortgage the first thing many people think of are traditional mortgages for buying or refinancing a home. Traditional mortgage loans are used to purchase property or to borrow money against the equity in your home. The borrower and lender come to an agreement that the borrower will pay back the borrowed sum of money plus interest in an agreed upon time window until the borrower is able to pay off the loan. 

In contrast, a reverse mortgage is a loan that allows a homeowner to borrow money utilizing the equity in their home where no payments are made monthly. Unlike traditional mortgages, reverse mortgages do not involve monthly mortgage payments back to the lender. Instead, the lender will pay the borrower a lump sum, monthly payments, or a line of credit to the borrower collateralized by equity in the home. The borrower will retain title to their home and the reverse mortgage loan will be paid back upon selling the home, leaving the home as a primary residence or if the borrower passes away. If married and one spouse passes away, the other spouse can stay in the home until they vacate the property.

What to Look Out for…

While reverse mortgages can be a very smart decision for the educated homeowner, they can be complicated and have been an area where scammers have taken advantage of retirees looking to make ends meet. It is important to work with upstanding lenders or brokers like 101 Loan that have experience with this type of mortgage and a proven track record as evidenced by their online reviews (yelp and google) and by professionals like financial planners, tax planners and estate planners that refer clients to reverse mortgage experts like 101 Loan.

How does a Reverse Mortgage work and How does one Qualify? 

Traditional mortgages that are called “Forward mortgages” require monthly payments all with the premise that the loan will eventually be paid off in a given period of time in the future.  Reverse mortgages don’t require monthly mortgage payments and as a result accumulate interest over time with the mortgage balance growing each month as payments to the mortgage are not paid.  

In addition, there are qualifying conditions the borrower must meet to qualify for a reverse mortgage.  First and foremost, the property that will be used for the reverse mortgage must be their primary residence of the borrower and have at least 50% equity in the property. Next the borrowers must be at least age 62 to qualify and have some lever of residual income to afford such costs as home insurance and property tax.  (There are exceptions to this)

Types of Reverse Mortgages

The most common type of reverse mortgage is known as a home equity conversion mortgage or HECM. HECM’s are insured by the Federal Housing Administration and have an upper loan limit set by the FHA. 

Jumbo reverse mortgages are necessary for borrowers looking to borrow more than the HECM limit. There are also single-purpose reverse mortgages which are a reverse mortgage in which the funds are used for a specific purpose, for example home upkeep or maintenance projects. Proprietary reverse mortgages are similar to a HECM. The major differences are that proprietary reverse mortgages are secured through private lenders and are not insured by the FHA.  For more info, see our Reverse Mortgage page. 

How can Rob McCarthy @ 101 Loan help?

If you are looking into a reverse mortgage for the purposes of freeing up cash, paying off outstanding bills, covering future expenses, or any other reason you deserve to have assurance that you are getting the best deal possible.  If it’s your very first time learning about what is a reverse mortgage, you will quickly learn small differences in rates, loan amounts, or loan conditions will make significant differences in your future finances. Rob McCarthy and the team at 101 Loan are reverse mortgage experts and have a long track record of supporting their clients to find the best reverse mortgage for their unique situation. 

Working with 101 Loan, you will have the opportunity to meet with a lending professional who will break down the type of reverse mortgage that will fit your specific goals and needs. They will then go to work gathering information through their connections with over 50 top lenders to make sure they are able to find the lowest possible rates and fees for your reverse mortgage. Finally, they will provide you with an easy to understand document that details your various loan options, rates, costs, amortization schedule and next steps to move forward. All through the process, 101 Loan will be there to answer any questions you might have to ensure you have the peace of mind you deserve.

There are many different options and possibilities when it comes to finding the reverse mortgage or any mortgage that is right for you. Having 101 Loan walk alongside you will take out the guesswork. 101 Loan also offers a full suite of services including Purchasing, Refinancing, Reverse Mortgages, and Commercial Loans.

 

For More Info, please contact:

Rob McCarthy
Senior Mortgage Advisor
www.101Loan.com 
408-377-4123 o  650-465-8957  c   408-608-1921 f
101 Loan is located at: 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014
CA DRE #01165697  NMLS #121019

“A Stock Market Loss is Only a Loss if You Sell”

A Stock Market Loss is Only a Loss if You Sell or so Financial Planners tell us!

For those in their 30’s, 40’s or 50’s, those age groups, should have time for the stock market to recover. However, for those much closer to retirement or retired, they may not be as fortunate!

As companies take huge losses with “Shelter in Place” and consumers are pulling back their purchases, analysts feel MORE stock losses are imminent.  The Federal Government stimulus will help in the short term, but longer-term, we are facing a new economic reality and one that we will not like.

If you’re in your 60’s, 70’s or 80’s, making back the market’s losses may only be a hope, and unfortunately not reality. The question to ask is…What are my options now that my fixed costs are the same, but my assets have taken a big hit?

We may have an answer for you. To learn more, please contact me or review the information on my site at https://101loan.com/reverse-mortgage-start/ .

Thank you.

Best Regards,

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o 650-465-8957 c

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014

CA DRE #01165697 NMLS #121019

“Over 200 “5 Star Reviews on Yelp and Over 30 years of Experience in Lending”

Market Update and What Should Retired Homeowners Due in a Declining Stock Market…

As for Mortgage Rates and the Stock Market…The dust has not settled.  Analysts say this week or next may be similar to the last few weeks with volatility in the market. For now, only loans of $510k or less are low in rate. Loans above $510k are expensive, “rate wise” when looking at refi options. Purchase loans are still low in rate as banks subsidize them. In regards to market volatility for this week, please see the following at https://seekingalpha.com/article/4335928-markets-are-setting-up-for-another-move-down-technically-speaking-for-week-of-3-30minus-4-3.

In Addition…Wells Fargo has announced they will only do jumbo loans for clients with $250k deposited with them and will not be doing conforming loans or government type loans (such as FHA and VA) going forward. We are glad we have access to more than one jumbo lender and access to everything else! Being a broker in this type of market does have its perks with access to multiple lenders, many of which are portfolio lenders and lenders that sell to Fannie Mae and Freddie Mac, giving our clients more loan options!

In Closing…with market devaluations, many of your retired clients may be feeling the pain or fear of seeing their portfolio or monthly income from those assets go lower. As a solution, we have access to Reverse Mortgage Financing that can help them Age in Place and eliminate stress and anxiety with the changing times. For more info, please contact me.  Any questions, please contact us.

With the Downturn of the Stock Market, We Have a Solution for you!

With a significant decline in the stock market, Retirees may have depleted a great deal of their reserves.  If over the age of 62 and a Home Owner, why not consider a Reverse Mortgage?  This may free up cash, pay off bills, cover future expenditures and provide those reserves that make us all sleep better at night!

Learn More about our Conforming or Jumbo Reverse Mortgage, both available with HELOC’s that provide:

  • No Monthly Mortgage Payments
  • Payment Free Equity Line of Credit
  • Cash-out with No Monthly Payments
  • Cash to Reinvest to Replenish Losses from Dow Dropping

For more info, please complete the following:

  1. What are your full name(s)?
  2. List your mobile number and property address?
  3. What is your birth-date (month and year only)?
  4. Please provide your homes estimated value and current mortgage balance?
  5. If you have a line of credit or fixed 2nd, what is the balance?
  6. What is your monthly income?
  7. Do you have any debts you would like paid off?
  8. Would you like cash out to invest or save?
  9. How would you describe your credit?

Note:  No credit report will be run and information will remain confidential.

If you have any questions or if you’d like to discuss the above, please contact me.  Thanks.

BTW…For more info, go here: https://101loan.com/reverse-mortgage-start/

All the Best, 

Rob McCarthy

Senior Mortgage Advisor

www.101Loan.com

408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014

CA DRE #01165697  NMLS #121019

Products/Services/Accolades:

  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.