You have seen them on TV, you have received dozens of pieces of junk mail regarding them, but where do you get the facts and how do you decide if a reverse mortgage is right for you?
The best resource for reverse mortgage facts is professional or non-profit organizations. Many reverse mortgage lenders will provide you with DVDs/videos to watch. These generally will give you an idea of how reverse mortgage works, However, “the devil is in the details”. There are several consumer-based reverse mortgage guides that will provide you with what you need and with the questions that you should ask yourself in the process of researching reverse mortgages.
National Reverse Mortgage Lender’s Guide “Just the FAQs” click here
It is advisable to talk to at least a couple of different lenders. Look for consistency in the information. Do not tolerate being sold to. Be sure to check out the company and the originator online. Ask for references. When you speak to lenders, if they simply talk about the features and benefits to the program, be a little cautious. A seasoned originator will ask questions to help you discover if you should even consider a reverse mortgage. Examples:
How long do you plan to live in your home?
Do you live in an age friendly home?
Have you done a budget? Do you know that you can support yourself comfortably in your home?
Is this a home you can comfortably maintain as you age?
The person/company you choose to work with needs to be:
Knowledgeable
Informative
Credible
Act in a fiduciary manor
If you have a reverse mortgage question, Call Angella Conrard, Certified Reverse Mortgage Professional. 866-949-7030.
Summer is a great time to increase your fitness level for a better quality of life. Fitness should involve more than just improving your appearance; it is really about maintaining your health. Please remember to talk to your doctor before starting any exercise Regimen. Aerobic exercise - loosely defined as any physical activity that makes your muscles, heart and lungs work harder - is best. Walking is one of the safest, most effective and easiest forms of exercise. Experts say 30 minutes of walking 3-5 times a week can bring about significant improvements in your fitness level. Walking can lower bad cholesterol and blood pressure while helping to maintain bone density and strengthen muscles. It also boosts your metabolism, helping your body burn more calories. Exercise releases mood-elevating endorphins.
A pedometer can help keep you accountable in your goal to become more active. It accurately counts your steps. You can get them for as little as $10 at Walmart. The more sophisticated ones cost around $30-40. Daily step count roughly correlates with these activity levels:
Less than 5,000 steps = sedentary
5,000-7,499 = low activity
7,500-9,999 = somewhat active
10,000-12,499 = active
12,500 or more = highly active
I recently discovered on days I do not purposely exercise I get less than 2,000 steps. YIKES! I GOTTA GET MOVING! Lets Go!
Starting September 11, 2010, reverse mortgage counselors will be implementing a new counseling protocol.HUD counselors will be required to use the national Council on aging is Financial Interview Tool (FIT) to create a budget for their clients based upon their income, assets, debt and expenses.
This tool is designed for counselors to help their clients understand their current situation, and if a reverse mortgage can assist them in their long-range goals of aging in place.
While some potential reverse mortgage borrowers may consider this new protocol unneeded, meddlesome or a bit lengthy considering that less than 20% of Americans have not had any kind of budget training others might think that it might be helpful and a protocol to prevent disasters for older Americans in the future in the area of successful aging in place with a reverse mortgage.
This new protocol will help potential reverse mortgage clients assess their current financial needs and their future financial needs and if a reverse mortgage should be considered. Counselors will also be completing a BenefitsCheckUp for clients whose income falls 200% below the poverty level or are disabled. This checkup can quickly screen clients for more than 1800 public and private benefits programs that they may be eligible for.
The counselor will provide the potential reverse mortgage client with (the loan originator may also provide):
The role of the counselor is that of an independent third party. Their job is to provide objective information on reverse mortgages to their clients so that they may make a fully informed decision as to if it's for their highest benefit. It's been my experience in working with clients that at the very least HUD reverse mortgage counseling can be a review of the information I've provided for my clients on the nuts and bolts of how reverse mortgages work. For the 20% of potential borrower's that may find this reverse mortgage counseling a bit tedious, in my opinion it's a safety net for those consumers who might not think about the implications of how reverse mortgage will affect them in the long run. This will help avoid defaults from the failure of paying taxes and hazard insurance that would only cause more stress to the FHA insurance program that puts the entire reverse mortgage program at risk, along with that a healthy future market.
If we had a crystal ball and could see into the future, we would not need to prepare ahead for end of life decisions.
James was 62 years old when a stroke made it impossible for him to communicate with his family. Neither his wife nor children knew anything about his financial or medical information. James had always taken care of things himself and left no written directives in his behalf. Besides having to locate important documents, the family was left to make their own decisions about James long term care.
The National Institute on Aging gives three simple, but important steps to putting your affairs in order:
“Put your important papers and copies of legal documents in one place. You could set up a file, put everything in a desk or dresser drawer, or just list the information and location of papers in a notebook. If your papers are in a bank safe deposit box, keep copies in a file at home. Check each year to see if there's anything new to add.
Tell a trusted family member or friend where you put all your important papers. You don't need to tell this friend or family member about your personal affairs, but someone should know where you keep your papers in case of emergency. If you don't have a relative or friend you trust, ask a lawyer to help.
Give consent in advance for your doctor or lawyer to talk with your caregiver as needed. There may be questions about your care, a bill, or a health insurance claim. Without your consent, your caregiver may not be able to get needed information. You can give your okay in advance to Medicare, a credit card company, your bank, or your doctor. You may need to sign and return a form.” National Institute on Aging http://www.nia.nih.gov
Advance directives are legal documents that state the kind of medical care or end of life decisions you want made in your behalf. It is a way for you to communicate your wishes to family or health care professionals. Emergency response medical personnel cannot honor Advance directives or living wills. They are required to save and stabilize a person for transfer to a hospital or emergency facility. Once at the facility a physician will honor the directives.
The Living Will as part of your directives gives your consent or refusal for sustained medical treatment when you are not able to give it yourself. If this document is not in place then a family member or physician will decide such things as:
Resuscitation if breathing or heartbeat stops
Use of breathing machines
Use of feeding tubes
Medications or medical procedures
Advance Directives and Living Wills are legal throughout the United States; however, some states may not honor other states' directive documents. Be sure to check with the state you live in for their requirements.
Review your directives periodically. They do not expire, but your wishes may change. A new or revised Advanced Directive invalidates the old one. Be sure your family member or healthcare proxy has a current copy.
General Power of Attorney - authorizes someone to handle your financial, banking and possibly real estate and government affairs as long as you remain competent.
Special Power of Attorney - authorizes someone you designate to handle certain things you cannot do yourself for a period of time.
Durable" Power of Attorney -The general, special and health care powers of attorney can all be made "durable" by adding certain text to the document. This means that the document will remain in effect or take effect if you become mentally incompetent.
Many people do not know the difference between a general and a durable power of attorney. A general power of attorney is a document by which you appoint a person to act as your agent.
Agents are authorized to make decisions for you, sign legal documents, etc. Many people are unaware that a General Power of Attorney is revoked when the person granting that power becomes incompetent or incapacitated.
It is the "Durable" Power of Attorney that allows for an agent to continue making decisions on your behalf no matter what happens to you. A responsible adult child of an aging parent would be given a "durable power of attorney" to act on behalf of the parent. This provides broader authority than just adding the child's name to bank accounts and documents.
You may choose to produce notarized power of attorney documents on your own. If your estate is large and real estate or business is included it is advised to secure a reliable attorney.
Anyone attaining a reverse mortgage must attend a reverse mortgage counseling session conducted by a HUD approved counselor. This is a consumer protection mechanism that is mandated by HUD and is a reverse mortgage industry standard.
This summer HUD will implement a new counseling protocol. One of the new tools that the counselors will be using to assist clients is the national Council on Aging's benefits checkup online screens service.
Benefits checkup is designed to help seniors discover benefits from existing federal, state and local programs that they may not know about. These benefits can include heating and energy assistance, restriction savings programs and income supplements.
Millions of older people have limited incomes and are eligible for these benefits but do not know about them. Benefits checkup includes more than 2000 public and private benefits programs from all 50 states and the District of Columbia. They include:
Since 2001, millions of people have used BenefitsCheckUp to find benefits programs that help them pay for prescription drugs, health care, rent, utilities, and other needs. If you know of an older American who might benefit from this program refer them to http://www.benefitscheckup.org. The process is a little time consuming but worth it for those in need.
With our current economic challenges, those of us looking forward to retirement need to be well-informed about our financial needs in coming years. And not only pre-retirees, but individuals already in retirement need to be wise to the changing economic environment. The good news is there are trained professionals who keep abreast of changes in the current economy, changes in laws and changes in government programs for the elderly. Professionals in this field are equipped to handle everything from help with retirement savings accounts, investment advice, guidance on government programs, estate planning or even new funding options such as reverse mortgages. A little planning prior to retirement will allow you to maintain your current lifestyle; whereas, a lack of planning may require you to live on an extremely tight budget. For those already retired, taking time right now to deal with financial problems instead of waiting for a crisis to happen is well advised.
A large number of retired individuals feel that they have planned well for the future only to find that rising medical costs, damage done to investment portfolios (by the current economy) and many other factors have caused them to go into debt. According to an article in "USA Today" seniors are racking up debt like never before. Elderly individuals who are in debt live with a constant burden over their heads. Most of these people are on fixed incomes and have no way of paying off credit cards and home equity loans that continue to mount to cover household budget deficits. In order to meet ongoing payments, seniors often forego purchasing medications and skimp on food budgets. They live like hermits -- never going out and pinching every penny -- in order to pay their obligations.
Most of these people worked hard their entire lives and managed their debt. They never anticipated the rising costs of prescriptions, expensive medical care or depletion of savings by living too long. The good news is there is help for these individuals. Here are just a few examples of some relief options that could be available. There are many more besides these.
Reverse mortgages - A Home Equity Conversion Mortgages (HECMs), also known as a reverse mortgage, is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person's lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title "reverse mortgage". For those seniors who are less fortunate financially but own a home, a reverse mortgage can allow them to remain in the home by creating extra income.
Life settlements -- A life settlement enables older individuals, businesses and other organizations to sell life insurance policies they currently own – but no longer want or need – for an amount greater than the cash surrender value. In some cases the value can be 2-3 times the cash surrender value. Even some term life insurance policies with a conversion option to permanent coverage can qualify for a life settlement.
Government Programs -- Some government programs such as food stamps provide temporary financial help for food. Other programs provide subsidized housing, help with medical expenses and provide tax credits. For veterans there is free health care, inexpensive prescriptions and disability income. Area agencies on aging offer individual counseling, legal help and advice with Medicare costs. (National Care Planning Council)
For some, living on a fixed income and dealing with debt can be an overwhelming burden. There are knowledgeable professionals and debt relief strategies that can assist in easing this burden. The National Care Planning Council keeps a list of financial advisers and attorneys who specialize in this area of planning at www.longtermcarelink.net.
Recently, two pieces of legislation, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 were signed into law. Together, these pieces of legislation make the most significant reform to health care in the United States since the enactment of Medicare. The Congressional Budget Office estimates that by 2019, approximately 32 million currently uninsured Americans will have health insurance, at a cost of about $940 billion. A major component of the reform legislation is the creation of state-based American Health Benefit Exchanges and Small Business Health Options Program Exchanges to provide health insurance for low-income individuals and small businesses. The following is a brief description of some of the most important provisions of the health care reform legislation.
For individuals
U.S. citizens and legal residents will be required to have health insurance by 2014, with some exceptions. Those without insurance will face a tax penalty of as much as 2.5% of taxable income.
Existing employer-sponsored health insurance plans will be allowed to remain essentially the same except the plans will be required to extend dependent coverage to qualifying children through age 26, lifetime limits (and eventually, annual dollar limits) on coverage must be eliminated, waiting periods for coverage cannot extend beyond 90 days, and insurers will not be able to deny coverage or charge higher premiums to people based on their health status and gender.
Medicaid eligibility will be expanded to include individuals under age 65 whose income is less than 133% of the Federal Poverty Level.
For families with incomes up to 400% of the Federal Poverty Level, tax credits and subsidies will be available to purchase health insurance through state-run exchanges, and to offset out-of-pocket costs.
Contributions to a health flexible spending account will be limited to $2,500 per year. Reimbursements from health FSAs and HRAs for over-the-counter drugs will be restricted, and tax-free reimbursements from HSAs and Archer MSAs for over-the-counter drugs will not be allowed, while the tax on HSAs and Archer MSAs increases for distributions not used for qualified medical expenses.
A rebate of $250 will be available to Medicare Part D (drug coverage) beneficiaries who reach the coverage gap (donut hole) and the coinsurance rate for costs within this gap are gradually reduced to 25%.
Adults with pre-existing conditions will be able to purchase coverage from temporary high-risk pools until 2014, when coverage cannot otherwise be denied for pre-existing conditions.
A national program will be established to provide limited reimbursement for long-term care expenses for individuals who participate by contributing to the program's cost through voluntary payroll deductions.
For employers
Employers with 50 or more employees that do not offer health insurance coverage will generally have to pay a premium tax of up to $2,000 per full-time employee.
Employers with more than 200 employees must automatically enroll employees in health insurance plans from which employees may opt out.
Employers providing health insurance must offer a voucher to qualifying employees to purchase insurance through an exchange.
Qualifying small employers may receive a tax credit for providing health insurance to employees.
Tax changes
The threshold for itemized deductions for qualified medical expenses will be increased from 7.5% of adjusted gross income (AGI) to 10% of AGI, though a temporary exception will be maintained for those 65 and older.
The tax for Medicare Part A (hospitalization coverage) is increased 0.9% for individuals with earnings exceeding $200,000, and for couples with joint earnings greater than $250,000. Also, high-income taxpayers will be subject to a surtax of 3.8% on unearned income, such as capital gains, dividends, annuities, and rental income.
The law imposes a 10% tax on the amount paid for indoor tanning services.
Some of these provisions are effective immediately while others will be implemented over the next several years. Consult with your financial professional to see how these laws may affect you.
Forefield Inc. does not provide legal, tax, or investment advice. All content provided by Forefield is protected by copyright. Forefield is not responsible for any modifications made to its materials, or for the accuracy of information provided by other sources.
Research has discovered that as we age, our diets and our need for dietary supplements become more. Doctors are increasingly concerned about boosting the levels of vitamins and minerals that we need as we grow older.
As most people get older, they tend to eat less due to a loss of appetite. As a result, many elderly individuals do not take in adequate amounts of vitamins and other nutrients as they did when they were younger. Other factors that can affect appetite and the inadequate uptake of vital nutrients are medications, medical complications, certain disabilities, diabetes, changes in the digestive system and even the changes in our skin as we age. One study estimates that one-third of the elderly are alarmingly low on important vitamins and minerals. Another study indicates that two thirds of the elderly patients admitted to a hospital are mal-nourished, resulting in low levels of vital nutrients. When a person is vitamin and mineral deficient, he or she is more susceptible to illness and infections. It is estimated that deaths due to infections are ten times more likely in the elderly.
Vitamins So what is a vitamin and why is it so essential to our bodies? A vitamin is a molecule that our bodies need to carry out certain biological functions. With only a few exceptions, we have no way to create vitamin molecules ourselves, so these vital building blocks must come in through food that we eat. The human body is known to need at least 13 different vitamins. We are able to store some of these for long periods of time in fat cells or in the liver -- such as vitamin A -- but most vitamins need to be replenished frequently.
Vitamins don't supply us with energy. We need protein, carbohydrates, and fats for that. What vitamins do is to help the carbohydrates, fats, and proteins release energy. These vital compounds are very important and they are required for all sorts of complex chemical reactions in our bodies. Vitamins are also needed to assist the enzymes that repair tissue and help with the production of cells. Many studies show that vitamins and minerals can help or prevent some of the disorders or diseases related to aging.
There are two types of vitamins -- water soluble and fat soluble. Water soluble vitamins are not stored in our systems. They pass through us quickly. In order to keep these nutrients in our bodies we have to consume them frequently. Water soluble vitamins contribute to our health, energy and stamina. This type of vitamin also helps in the function of over one hundred enzymes and chemical reactions that give our bodies energy. Listed below are some of the well known water soluble vitamins and their benefits.
Vitamin B6 – also reduces swelling. When combined with vitamin B12 in proper concentration has shown to reduce heart disease.
Vitamin B12 – This is the most vital of the B's. It aids in the formation of cells, myelin production, healthy nerves, and maintaining immune system and mental function.
Vitamin C – Vitamin C helps in the formation of cartilage and bone. Some studies have shown it may reduce the progression of osteoarthritis.
Fat soluble vitamins are vitamins that stay in the body and are typically stored in the liver. You can usually receive enough of these compounds by eating a well balanced diet. Any condition that can interfere with the absorption of fat in the body like tuberculosis, cystic fibrosis, hypothyroidism, lactose intolerance, and many other diseases or disorders can cause deficiencies in these vitamins. Before taking the daily recommended dose of fat soluble vitamins you must consult your doctor. Overdosage of these substances can cause a toxic build-up. Listed below are the major fat soluble vitamins.
Vitamin A – Lungs, throat and mouth depend on vitamin A to retain moisture. This compound is also important for your skin, bones, teeth, digestive system, urinary tract, eyes and aids in preventing skin disorders like acne, boils, and bumpy skin. Some studies show that it may aid in slowing the aging process.
Vitamin K – plays an important role in the clotting of blood. Research has linked vitamin K to bone health.
Vitamin D – is produced in the skin by exposure to the sun. Deficiencies mostly occur in people living in northern latitudes where daylight is brief during winter months. Changes in skin as we age can also cause poor production of vitamin D. Studies show that osteoporosis might progress faster in women with low levels of vitamin D. This compound is essential in helping the body absorb calcium and in maintaining strong bones.
Minerals Unlike vitamins, minerals are not manufactured by plants or animals. Minerals form in the earth, and are absorbed by plants and found in animals that eat the plants. Listed below are some of the essential minerals needed to maintain a healthy body.
Iron – helps carry oxygen throughout the body. Iron also helps the immune system ward off foreign entities.
Calcium – Most women as they get older need calcium supplements to prevent bone loss that causes osteoporosis. Calcium supplements will not do you any good if you do not have the right levels of vitamin D. your body cannot absorb calcium without vitamin D.
Zinc – Zinc deficiencies can affect skin, nerves, and the body’s immune system.
It is important that you take vitamin and mineral supplements with food. Fat soluble vitamins require fat ingestion to result in the best absorption. It is best to take your supplements at the biggest meal of the day.
We use vitamins every day to support the processes our bodies use to maintain life. Ongoing reduced levels of vitamins can make you weak and more vulnerable to disease. Proper nutrition with vitamins and minerals is vital for seniors to maintain a healthy lifestyle. Other health issues related to aging are discussed on the National Care Planning Council website at www.longtermcarelink.net.
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reverse mortgages help seniors strapped for cash More seniors are turning to a reverse mortgage loans these days. A reverse mortgage is a loan that allows seniors to tap into their home equity and use the money to pay for things such as medical bills, groceries and even home repair.
FHA is overwelmed with condo projects to be approved HUD, did away with condo projects ability to be approved with "Spot Condo" proceedures to get a better hold of the data of how many FHA loans exist in what projects. Approvals are adding another month in the process of attaining a reverse mortgage for condo owners.
Older American Home Values are flattening Golden Gateway Financial released new usage data from its online reverse mortgage calculator showing that average home values for older Americans have halted their slide after remaining flat or declining for seven consecutive quarters.
A new survey from the Center for Retirement Research at Boston College found that 40 percent of individuals 45-59 expect to retire later than they had before the downturn, with most of the respondents intending to work an additional four or more years before retirement.
Financial Planning Exchange Forum This is an excellent forum, set up by my friend Bryan Wisda who has a passion in helping seniors and people with finances in general
Obama to Promote Annuities and Other Forms of Guaranteed Life Income The Department of Labor and the Department of the Treasury (the “Agencies”) are soliciting comments whether the agencies could or should enhance the use of lifetime income or other arrangements designed to provide a stream of income after retirement.
One of the questions is related to reverse mortgages:
What are the advantages and disadvantages of approaches that combine annuities with other products (reverse mortgages, long term care insurance), and how prevalent are these combined products in the marketplace?
Why the sudden interest in how the government can enhance the use of lifetime income arrangements?
The New York times recently reported that the Obama Administration is promoting annuities as a tool to give Americans a better shot at a more secure retirement.
Is Reverse Mortgage Interest Deductable? Reverse Mortgage interest deduction rules are the same for traditional loans and for reverse mortgages:
Reverse mortgages are meant for the elderly who will most likely be paying their mortgage and the accrued interest only after they die so the interest deduction is usually just an afterthought. Upon death and on their personal tax returns mortgage interest may be deductible for the original acquisition debt interest, home improvement debt interest and possibly up to $100k of debt on the home for any other use but not deductible for AMT (but it probably won't make that much of a dent in their personal taxes)
Qualified Residence Interest Expense.
Congressional Justification Docs Detail Possible Changes to FHA Reverse Mortgage Program The US Department of Housing and Urban Development published the 2011 Congressional Justifications for the FY 2011 Budget which provides more information regarding the OMB’s $250 million credit subsidy request for the Federal Housing Administration’s reverse mortgage program.
