Alot has also been happening lately with ReverseMortgageCity.com and I plan on rebuilding the site soon to make it more user friendly, and of course I will be writing more often as well.

If you have any questions feel free to contact us anytime.

Thank you and best wishes!

The ReverseMortgageCity.com Team

There are many reasons for all of this manipulating in the economy that we don’t need to get into here and if you really want to read more about the economics of the current economy there are many great blogs out there that will really dive into the details, I like calculatedrisk.blogspot.com

The thing that we are concerned with in the Reverse Mortgage business, and what you should be watching as well, is if the money manipulating by Fed will lead to increased inflation. Inflation is a dangerous problem in economies and the Fed cannot allow inflation to get out of control. The Fed, as one of their mandates, has the responsibility to closely monitor and control inflation. The way the Fed combats inflation is by raising interest rates and strengthening the dollar. This in turn pushes interest rates up on bonds, think mortgages and treasuries, in order to “choke” the excess liquidity out of the markets by making money more expensive to borrow in an attempt to keep prices down. By now you’ve probably noticed how rates on bonds go up when their is inflation and rates go up when the Fed fights inflation, this is the problem with inflation! You really can’t win when it comes to inflation in the economy.

Interest rates on adjustable rate reverse mortgages are at the lowest levels we have seen in years, same goes with fixed rate reverse mortgages. The point here is this, if you are considering a reverse mortgage I would urge you to look at the fixed rate as your reverse mortgage of choice. Although both options eliminate your payments and have many of the same features, going with a fixed rate reverse mortgage, although more expensive right now, may save your a lot of interest in the future.  If the Fed begins to raise interest rates back up in the next year you will see rates on reverse mortgages move up as well. Locking in a fixed rate now and taking advantage of the current economic situation may be the best financial decision you can make.

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With that in mind, where are the top “boomer” friendly cities when it comes to working in retirement. Below are the ten geographically representative cities that appear on a list of the 50 best places for retirement jobs, as compiled by Retirementjobs.com (For a complete list you can go to their website). Selections are based on six factors: Presence of employers eager to recruit and retain older workers; presence of age friendly industries, such as health care, banking and government; general employment growth; low unemployment; affordable housing costs; and a manageable cost of living.

• Alburquerque, N.M.
• Durham/Raleigh/Cary, N.C.
• Fayetteville, Ark.
• Joliet/Naperville, ILL.
• Las Vegas, NV
• Madison, Wis.
• Nashua, N.H.
• San Antonio, Tx
• Sarasota, Fl
• Seattle/Bellevue, WA

The housing bill, passed by the U.S. Senate, designed allegedly to ease the crunch on foreclosures and encourage growth in the housing sector is nothing more than a Democrat driven hand out to those with money, with banks possibly making even more money off of those that cannot afford to keep their homes. In a worst case scenario, it wil create an over abundance of homes on the market and drive prices further down.

David Sloane, AARP Senior Vice President, issued the following response to the U.S. Senate’s passage of the “Foreclosure Prevention Act of 2008”:

“AARP is disappointed the legislation failed to include needed provisions that would help prevent foreclosures. While we appreciate the inclusion of the reverse mortgage provisions of the FHA Modernization Act, we hope this bill is the down payment on a broader overall effort to protect millions of American families from the crashing housing market.

“AARP has been working with Congressional leadership to modernize the Federal Housing Administration and expand access to government-backed reverse mortgages, while limiting the high fees charged. We are grateful for the broad bipartisan support on these provisions that will help older homeowners tap into the equity in their homes in order to pay for necessities like long-term care needs, home repairs, and emergencies.

“However, we are now looking to leaders in the House of Representatives, as well as further efforts in the Senate, to provide help that would allow millions of families prevent foreclosure on their homes. We will work with leaders in both chambers on a broader bipartisan package that will include common sense solutions, like extending bankruptcy protections – already available on yachts and vacation homes – to also include a family’s primary home. These protections are needed to help homeowners remain in their homes while they work out payment schedules.

“Congress showed us earlier this year that it can overcome partisan obstacles to directly help Americans feeling the pressure of the tightening economy. We are hopeful they can come together again to help families stay in their homes and protect their financial security.”

A recent article on MSNBC.com, “Confidence in retirement savings is crumbling” reported that about 22% of workers were worried about “not having enough money to cover medical expenses in retirement.”  Twenty-seven percent of workers were worried about long-term care costs.   The article also reported that 15% of people that were already retired were worried about medical expenses, and 28% were worried about long-term care.

There are many accounts of people who have lost homes, or declared bankruptcy because of health care costs.  Even with health insurance, co-pays and care that is not covered by insurance can still cripple many people’s finances.  In “Lack of Health Insurance Leads Many To Bankruptcy” by Kristian Foden-Vencil, Oregon Public Broadcasting, Oct. 3, 2007, Doctor David Himmelstein , an associate professor at Harvard, said that of Americans who file for personal bankruptcy, approximately half cite medical bills as the prevalent cause.  According to the article, he also stated that “over the last 20 years, there has been a 20-fold increase in the number of medical bankruptcies.”

Another measure shows that senior citizens are especially vulnerable to the costs of medical care.  The paper titled, “How Many Struggle to Get By in Retirement?” by Barbara A Butrica, Dan Murphy, and Sheila R. Zedlewski, re-examines the official measure of the poverty threshold.   The authors of the report write that the official poverty measure does not accurately reflect today’s spending needs and economic resources, especially for people 65 and older, whose “resources, needs, and health expenses differ most dramatically from the assumptions reflected in the official measure.”   

The study includes additional income that the official measure does not include, specifically: “in-kind transfers, capital gains and losses, taxes, out-of-pocket health spending, the value of owner-occupied housing, [and] the potential income from financial assets.”  Even with the additional income, however, the results of their study showed that a more comprehensive accounting for health care spending “produce higher poverty rates than the official measure” for people over age 65.

As health care costs continue to rise and our need for health care increases as we age, people are often put in the position of choosing how to allocate their income.  I have worked with many homeowners who have had to choose between paying their mortgage and other bills or paying for necessary health care.  If they were lucky enough to be ever 62 and have enough equity in their home to qualify for a reverse mortgage, however, those health care costs would no longer have to be paid at the expense of not paying their mortgage, and their social security checks, their pension, and their retirement fund could go that much further.

The report also states that “Proponents of using reverse mortgages for long-term care costs argue that they could enable more seniors with disabilities or long-term care needs to remain at home, with services they control, while potentially saving public dollars being spent through the Medicaid program.”  Most importantly, senior homeowners could pay for these services comfortably, without having to decide between the medical care or their mortgage. 

Reverse mortgages are a valuable way to prepare for unexpected expenses in retirement.  As health care costs continue to go up it is important to prepare yourself ahead of time for any unforeseen problems.  Qualifying for a reverse mortgage is not dependent on credit history or income so even if you have had problems paying medical bills or your mortgage in the past, it will not affect your ability to get a Reverse Mortgage now.   With reverse mortgages, no mortgage payments need to be made, essentially removing the risk or foreclosure, and they are FHA insured, non-recourse loans, so they are safer than a traditional mortgage as well.  Not everyone needs a Reverse Mortgage, but it is important to keep it in mind if you are faced (or ever could be faced) with a medical emergency — it may just keep you in your home, and healthy.

This was a great article I found written by Jean Mitchell. It gives a good overview of some of the basics of Reverse Mortgages and some of things you need to be aware of as well.

You’re in a dilemma: Your gazebo on the patio was smashed by the recent high winds, but you don’t want to borrow from the bank or use your credit card to finance the repairs. Then you remember hearing about reverse mortgages, which can enable homeowners who are 62 or older to convert part of the equity in their homes into cash. You are told that you need not sell your home or rack up additional monthly bills. They say the money can be used to make home improvements, repairs, finance healthcare expenses, beef up retirement income or meet myriad other monetary expenses.

Usually, you don’t have to repay the loan as long as you live in your home. Reverse mortgages can help homeowners who are house-rich but cash-poor to remain in their homes and still take care of financial obligations. But go cautiously into a reverse mortgage.

- You don’t have to repay the home as long as you remain in the home as your primary residence, you must live their atleast 6 months out of the year. If you are in the hospital or will be away it is recommended to contact your lender and discuss the situation with them. Many homeowners avoid contacting their lender but I always recommend contacting them as soon as you know their is a problem and they will be more willing to work with you.-

Your home is probably the biggest investment you’ll ever make; you’ve lived in that house for years and have built up a significant amount of equity and you don’t want to make an irreversible mistake.

As Kathleen Delaney, of the Nevada Attorney General’s Office, said, “There are infinite varieties of reverse mortgages, as there are of any kind of loan. But there are three basic types of reverse mortgages.”

Single purpose. These loans are generally offered by some state and local government agencies and nonprofit organizations. They are generally low cost but are not available everywhere. As the name implies, these loans can be used for one purpose only specified by the government or nonprofit lender, such as paying for home improvements. Usually, you can qualify if you are in a low or moderate income bracket.

Federally insured. Backed by the U.S. Department of Housing and Urban Development, these loans are called Home Equity Home Conversion Mortgages, or HECMs.

Proprietary. This type of loan is private money backed by the companies you are borrowing from. In general, HECMs and proprietary reverse mortgages are apt to be more costly than other home loans. Delaney says “Up front costs can be high, thus making the instrument more expensive if you live in your home for just a short while. Both these forms of reverse mortgages are widely available, have no income or medical requirements and can be used for any purpose.”

The Federal Trade Commission, in a Facts for Consumers news release, describes certain aspects of reverse mortgages that you should be aware of:

An important aspect: Because you retain title, you are still responsible for property taxes, insurance, utilities, fuel, maintenance and other expenses. For instance, if you don’t pay property taxes or let your homeowner’s insurance lapse, you risk making the loan due and payable immediately.

Jean Mitchell is an active Dayton senior who has revived her writing career with this column.

Mr. Clark wrote this article for the LA Chronicle that I thought had some useful information in it that is importan for seniors to consider when deciding on a Reverse Mortgage. As with any loan their are pros and cons and Reverse Mortgages are no different. Below are 3 things you should consider and prepare for when thinking about a Reverse Mortgage.

“As the baby-boomers prepare for retirement reverse mortgages are going to be the next mortgage boom according to most analyst. The baby boom began in 1946 and continued through 1964. During those 19 years, 76 million people were born. As this segment of America begins to retire a large portion of them will need to rely on their homes equity to make “ends meet.” How they access that equity will be the mortgage industries primary focus in the years to come.

The traditional “forward” mortgage has the homeowner borrow the money by way of a traditional mortgage or home equity line and make payments on that amount. The homeowner takes the money, places it in a safe interest bearing account and uses the money to augment their income. The interest that is earned on the money is used to supplements the monthly payment that the homeowner has to make. The problem is that the interest shrinks as the money is used and the mortgage payments stay the same.

Reverse mortgages have actually been around since 1989, but their popularity is skyrocketing as a result of the wave of baby-boomers that are retiring. These mortgage products are safe and beneficial when applied to the right homeowner and circumstances. Lendfast.com recommends that borrowers use FHA-insured Home Equity Conversion Mortgage (HECM) when considering these mortgage products. Getting a reverse mortgage from the private sector may include more headaches and costs. However, as with financial product, there are some dangers that you need to be aware of; here are the top three reverse mortgage pitfalls to lookout for.

1) Repayment and Forfeiture – Most, if not all reverse mortgages will not require you to make payments or repay the loan for as long as you live. Once you pass on your heirs will have the opportunity to remortgage the debt or sell the house and repay the loan. If the home has equity above the amount owed to the bank your heirs will receive those proceeds. If the home is “upside down” your heirs have no obligation to repay the debt, but they will forfeit the home unless they pay the amount owed.

However FHA rules state: “When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender.” The danger here is “no longer use it for your primary residence. This means if you have to go to a hospice, nursing home or intend to live in another home and use the house as a second home the bank will call the debt due. This is definitely something you want to consider before taking out a reverse mortgage.

2) Cost and Interest Rates – At the inception of reverse mortgages they were almost exclusively offered with adjustable interest rates. Adjustable rates are still standard practice and you are almost certain to be offered this option to begin with. Don’t! There are fixed rate programs available now and at today’s rates adjustable rates are only going to go up in the future. It’s easy to be lured into an adjustable rate because lower interest rates in a reverse mortgage have higher monthly payments. If the interest rate increases your payment decreases, as does the time frame you have to draw on the mortgage. Just remember, adjustable interest rates are a gamble and Las Vegas wasn’t built on winners.

A considerable downside to reverse mortgages is the high up front costs. This cost can be compensated by a lower interest rate over time, but some seniors choose other options to draw on their home equity. Reverse mortgage closing costs should be about the same as most loans except the 2% mortgage insurance premium that FHA charges to insure the loan. FHA insures the lender will be paid regardless of the home’s value when and if the lender has to take over the property.”

- An important note to remember here is that some closing costs are negotiable, e.g the origination fee, and you should be able to work with them on these costs.-

3) Upkeep, Taxes and Insurance – “On traditional mortgages your escrow payments are added to your payment but they are subtracted from your monthly check on a reverse mortgage. Most of the time you will be shown the monthly amount you will receive each month BEFORE the escrows are taken out. This means that you could sign up expecting to get $900 per month and only receive around $700. Make sure you are given the monthly payment LESS your escrow payment. Like most mortgages you will usually be given the option to escrow or not to escrow, however the bank has a vested interest in your home. Meaning if you do not maintain your insurance and taxes as they deem responsible they can call the loan or force an escrow account on you.”

Many lenders also want to make sure the home is kept in good condition and you should make sure to set aside some money to take care of basic upkeep of the home.  Ask the loan officer what the lenders policy is on maintenance and repair. You may want to take enough money up front to have future repairs taken care of so that your monthly payment stays the same.

As with every loan it is important to value the pros and cons and talk to trustworthy advisors to make sure you are making the right decision. Reverse Mortgages can be a very valuable tool for a seniors retirement plan, however, that is not to say they are perfect and the three things in this article are a few of the things that you should conider.

In my never ending quest to find articles about retirement and reverse mortgages for my readers I have found myself going through the archives of the major news outlets for articles that may be of use for ReverseMortgageCity.com readers. There is a lot of great news and advice out there on reirement and reverse mortgages and I will do my best to try and dig it all up and put it here for you to read.

In the working world, you tend to get most of your income from one place– your job. But in retirement, your income will probably be more like a patchwork quilt from various sources, Gallup found in a survey released this week. Gallup has identified 10 sources of income that Americans are using to fund retirement.

1. A 401(k), IRA, Keogh, or other retirement savings account. Many Americans who aren’t retired expect that a retirement savings account will primarily finance their retirement (47 percent). But actual retirees find the reality to be quite different: Only 21 percent of current retirees view these accounts as a major source of retirement income, Gallup found. Americans with incomes of $75,000 or more were significantly more likely (72 percent) to list a retirement savings account like a 401(k) as their expected primary source of retirement income than were those with income of less than $30,000 (20 percent). “They’re saying that they expect a 401(k) to be a major source of income,” says Lydia Saad, a Gallup Poll senior editor. “But people are not saving as much money as they should toward retirement.”

2. Home equity. Many seniors are tapping into the equity they have built up in their homes. Two ways of doing this are taking out a reverse mortgage or selling a house to move into less expensive quarters. Some 26 percent of Americans expect to use home equity as a major source of retirement income, which almost squares with the 22 percent of retirees who currently do, Gallup found.

3. Pension plan. “This is becoming a disappearing source,” says Saad. Gallup found that only 26 percent of nonretired adults think that an employer-sponsored pension will be a major source of retirement income, compared with 36 percent of current retirees who depend heavily on their pension. “Work-sponsored pension plans are not as prevalent today as they were when current retirees were working,” Saad says.

4. Social Security. Only 1 in 4 nonretired adults expects to receive considerable retirement income from Social Security, Gallup found, but 55 percent of current retirees say they rely on it as their major source of income. “Current workers don’t like to say that Social Security will be a major source of their income, but the reality is that it will be a major source of income,” says Saad. The Employee Benefit Research Institute says that the average American 65 and older receives 42 percent of his or her total retirement income from Social Security (more than from any other source), with low-income retirees receiving 92 percent of their income from their monthly check.

5. A regular savings account or certificates of deposit. A traditional savings account seems to have taken a back seat to tax-deferred savings accounts. Nineteen percent of nonretired adults expect regular savings will be a major source of retirement income, while 14 percent of current retirees depend on such accounts and CDs.

To read more of these useful tips you can go to the US News website here.

Few people gleefully anticipate the task of caring for an aging parent—but plenty seem to deny that it’s coming. Sooner or later, avoidance can thrust adult children into the caregiver role with a shotgun start. A parent’s slip in the bathroom or a collision caused by a mistake in the driver’s seat can precipitate a deluge of anguished decisions and rapid changes you’re not ready to handle. Suddenly, you could be scrambling to locate account numbers to pay Mom’s bills while she’s in the hospital, tangling with her insurance company to figure out why coverage for an X-ray was denied, and consulting with your brother—who lives three states away—about getting Mom into an assisted-living facility. You grapple with guilt because your mother never wanted to move out of her home, but now her condition leaves little choice. As the drama plays out, you’re also trying to stay afloat at work and look after your other dependents, the kids.

The first step toward avoiding such baptism by fire is to acknowledge you’ll most likely take on caregiving responsibilities someday. According to the Family Caregiver Alliance, the number of “unpaid family caregivers” is set to reach 37 million by 2050, an 85 percent increase from the year 2000. You can help your parents stay happily independent as long as possible if you start those tough conversations now and do some thorough preparation. Here’s a game plan.

The vast majority of senior citizens want to live out their days in their own homes—and without being a burden on their kids. Planning ahead greatly raises your odds of making it happen.

1. Consider hiring a pro. A knowledgeable, neutral professional can assist from the start, even when your parents are still living at home. Locate an expert through the National Association of Professional Geriatric Care Managers to help navigate everything from finding a companion service for Dad to identifying a mediator to help settle family differences over caregiving choices. “You may think you can handle it yourself, but you can’t—not when you’re so [emotionally] close to the situation,” says Don Terrell of Ellensburg, Wash., who got help from a geriatric care manager later in the process when his family sought a facility for his mom, who has Alzheimer’s disease. According to NAPGCM, an initial assessment runs $300 to $800, and services cost $80 to $200 per hour, depending on where they’re needed.

2. Keep track with technology. Helping your parents remain in their home may be realistic but typically requires at least a few adjustments to keep them comfortable and safe. Savvy families are deploying products like QuietCare, which relies on strategically placed motion sensors, to keep tabs on their elders. Phyllis Baker’s 80-year-old father lives alone outside Detroit, nearly five hours away from her home. But she needs only to check her iPhone to allay worries, she says, like “Has he gotten out of bed? Is he in the bathroom and never came out?” No cameras or microphones are involved, so her dad has privacy, and a secure website updates a status report every two hours. QuietCare calls immediately if anything is out of the ordinary. Inspired by her two sons, marines regularly deployed overseas, Baker is considering another tech boost: webcams for “virtual meals” together.

3. Remove booby traps. The National Association of Home Builders has certified aging-in-place specialists who can consult and make structural changes. Extras that you or a specialist might install, says Meri-K Appy of the Home Safety Council, include antiscald devices for showers and faucets (like H2O Stop, a new product) that protect older skin, which is quick to sustain serious burns; alternatively, set water heaters to “low” or at 120 degrees. Carbon monoxide detectors are recommended since elderly people are sensitive to even low concentrations of the deadly gas. Special smoke detectors with strobe lighting or a vibrate feature can wake them up when conventional devices wouldn’t—new research suggests the latter are set at frequencies that many elderly people can’t hear. Grab bars in the shower and near the toilet are usually a must, but their often ugly appearance isn’t. Moen’s new SecureMount options are an improvement on institutional-looking models, says Appy, and they don’t require tearing down tiles.

4. Visit frequently. The time together matters, plus you’ll have a better sense of whether they’re safe, mentally sound, and in the best living situation, says Alexis Abramson, author of The Caregiver’s Survival Handbook. Keep an eye out for subtle changes: Are the plants watered? Is unopened mail piling up? Do they have bruises suggesting they may have fallen? Enlist your family and your parents’ trusted neighbors to check in.

5. Anticipate expenses. To help maintain your parents’ independence and health, you’ll very likely need to pay for a few services. The national average for a home healthcare aide to assist with hygiene and medication, say, is $19 per hour, according to a MetLife Mature Market Institute analysis. Think Medicare will pay? Not if they need the aide for a chronic condition, says Mary Lynn Pannen, president of NAPGCM. “I dispel this myth all the time.” Adult day care averages $61 per day, according to MetLife. Lisa Midden got financial assistance for her 88-year-old dad through a Florida state Medicaid waiver and a local grant, but he must requalify each year. “Until we learned about these [benefits], everything was coming out of our pocket,” says Midden, whose father lives with her and her husband in Orlando. A few afternoons at adult day care and several hours from a nurse’s aide are covered each week, plus the Middens get 12 weekly hours of “respite care.” Start with your local Area Agency on Aging.

There are 10 more great tips for taking care of your parents on the US News website for you to read.