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Can I Use a Reverse Mortgage to Buy a Home?

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Can you use a reverse mortgage to buy a home? The short answer is yes, but the long answer requires more extensive research. Before discussing the process, let’s first define what a reverse mortgage is.

What exactly is a reverse mortgage? A reverse mortgage is a loan that is awarded based on a few qualifying factors. This loan is only awarded to individuals who are 62 years of age or older. Therefore, it is a loan that exclusively benefits seniors. A reverse mortgage allows homeowners to convert part of the home’s equity into cash. Other qualifications for a reverse mortgage include, but are not limited to:

  • Current value of the property
  • Balance on existing mortgage loans
  • Interest rates

Why was this specific loan created? Mainly as a way to help retirees who have limited income. While decreased income occurs in conjunction with retirement for almost everyone, certain retirees may struggle more than others when it comes to bill payments. Furthermore, a reverse mortgage, by design, helps seniors to tap into funds that have, over time, accumulated in their home.

How does a reverse mortgage differ from a traditional mortgage? Here is the fundamental difference between the two: A traditional mortgage is used to buy or refinance a home. On the contrary, a reverse mortgage allows for recipients to receive a cash payment based off of property they already own. While reverse mortgages may be a bit rarer in the home buying realm, they still can assist retirees when it comes to making a purchase.

Let’s talk about the HECM for purchase program. The HECM for Purchase Program makes the process of purchasing a new home for senior citizens a more seamless process. The program essentially streamlines the home-buying and selling processes by combining them into a single transaction. The program aids in assisting seniors who wish to reduce their cost of living. If you qualify for a HECM purchase loan, you will not need to pay a monthly mortgage bill. As a matter of fact, you will not need to pay back your home loan unless you move out. Additionally, this is a loan that does not charge interest, and therefore, you won’t be blindsided by any surprise fees further down the road.

The process of using a reverse mortgage to refinance a home is almost exactly the same as using it to purchase a home. The key difference is that the money received from the reverse mortgage will be acquired from the home you are purchasing, and not the home you are selling. Like a traditional loan, you will need to meet the basic requirements in order to receive an HECM. Reputable lenders will be able to determine rather quickly, your eligibility. In many cases, a lender can determine the loan prior to drawing up an actual contract.

What are some of the benefits and drawbacks when it comes to buying a home using an HECM loan? The good news is that vetting for HECM loans is relatively simple. Employment income is no longer an issue, nor are other avenues of income, or, net worth. Typically, the rates on HECM loans are more favorable, for seniors, than other loans. While there are considerable benefits to an HECM loan, it still pays to err on the side of caution. Ask yourself some questions about your current standing. For example, will the profit from the sale of your current home be adequate for the new home you wish to buy? Remember that an HECM loan is awarded exclusively in the form of a cash payment.

How does a senior prequalify for an HECM loan? A good time to start the prequalification process is when you’ve identified a house you wish to purchase. At this point, knowing exactly how much of a down payment you need will help determine if you’ll prequalify. It’s also possible to gauge prequalification, when a client has determined the maximum amount of funds, they are willing to put toward a down payment. At this point, the lender can calculate the maximum sales price of homes that will comfortably fit into the buyer’s budget. In both of these circumstances, by providing the necessary information, the lender will be able to quickly and efficiently map out the options available for the buyer.

Take a moment to map out your future goals, and determine if buying a home is the next logical step. It’s always best to exercise caution when it comes to making a major home owning decision. Before going forward with an HECM loan, or any loan for that matter, consider your options. Senior citizens often have the luxury of time on their side. Any long-term investment will benefit from thorough research and having a clear understanding of the various choices.

Still not sure if a HECM loan is the best course of action? Consult with your lender. Lenders are able to fill in the blanks and have the knowledge required to help you make the best financial decision. If you’re unsure of which direction to take, speak with your lender. Getting a second opinion when it comes to a commitment like homeownership is in your best benefit. You’ll never regret putting in the extra time when it comes to research.









Tips to Make Your Existing Home Safer & More Accessible

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While downsizing is a natural progression for many senior citizens, it’s not always preferential or cost effective. For seniors looking to make their existing space safer and more accessible, here are some basic tips and suggestions:

Living independently is a struggle for many elderly citizens. Seniors are more at risk to be victims of falls or other mobility related injuries. If possible, recruiting family members to live with seniors may help create a safer environment. However, this is not always the most logical scenario, and seniors may not have immediate family in the area, or members who are willing and/or able to assist. Certain companies offer in-home care, that is designed to help the elderly remain in their home, while also minimizing risk. This specific course of action, is particularly helpful for seniors who live by themselves and struggle with any sort of disability.

While in home care is ideal for many, it’s not always affordable, and for others, not necessary. Furthermore, there are many upgrades seniors can utilize that will not be financially strenuous, and also allow for seniors to thrive independently. Grab bars are a fantastic addition to many spaces, and relatively easy to install and maintain. Grab bars are commonly found next to toilets and showers. Additionally, adding some sort of support like a folding chair in the shower, can help seniors who struggle with prolonged periods of standing. Bathrooms are often notorious for causing falls, therefore taking certain precautions can help alleviate stress when it comes to heightened fall risk areas.

Another area that can be potentially dangerous, are the stairs. As senior citizens age, they may find that the stairs become increasingly more difficult to navigate. Luckily, there are now various different installations that can help the elderly tackle the staircase, safely. Staircase lifts in particular are often utilized in home planning for the aging. It’s also worth noting that Medicaid and some insurance plans may help cover stair lifts. If you’re curious to know your options, talk to your insurance provider for further information.

Medical alert systems with personal pendants can help ease the mind of seniors who live on their own. Medical alert systems offer the elderly peace of mind, particularly if they live alone, or are left alone for extended periods of time. A medical alert system allows seniors access to emergency numbers and services if they happen to suddenly lose their mobility. These personal pendants can travel from room to room on the person’s body, and can be used at any given moment to alert an operator of a medical issue or crisis. There are several different providers who offer this service, and they vary based on what services they provide.

Cellphones can prove useful, even for the less technologically savvy. Many cellphone providers still offer models that are user friendly, particularly for those who may not be the most technologically inclined. Cell phones offer another safety net for seniors. Many models now allow for certain numbers to be “favorited” and thus, easily accessible in the event of an issue. Additionally, app stores for smartphones now have a variety of applications geared toward ensuring the safety of the user.

Routine checks of equipment can be lifesaving. While this tip is relevant for everyone, it is particularly pertinent for seniors. Routine checks for smoke alarms, carbon monoxide detectors, and the like, can be lifesaving.

Assess other areas of the home for optimal mobility. Large area rugs and other furniture may no longer be practical for individuals struggling with their mobility. Rugs in particular are often not user friendly when it comes to wheelchairs. In these instances, it’s a good idea to assess the necessity of certain furniture. You can also take precaution by finding the best flooring material for your specific needs. Certain flooring options are far better for fall prevention than others.

If finances are an issue, look into funding opportunities. Senior citizens can often find themselves the benefactors of certain programs and financial aid to improve their quality of life. Doing some research into these programs, and discovering where you may qualify for aid can greatly reduce some of these costs.

There’s no such thing as being too cautious. Creating a safe environment may save certain individuals from large medical issues down the line. Being cautious can not only prevent physical harm, but it can also give senior citizens peace of mind, and tranquility, during an often-transitional time.








Options for Downsizing and How it Benefits Me

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Downsizing makes sense for many senior citizens, and there are a variety of benefits that come with choosing to do so.

Firstly, what are the options for seniors looking to downsize? Buying a smaller home, condominium or townhome often make sense for the elderly. It’s almost always more lucrative from a financial standpoint to consolidate your space. However, seniors do also have the option of retirement homes or communities. In this case, seniors can live with like minded individuals who are in a similar stage of life. If health concerns are an issue, retirement communities can often be ideal as they have trained professionals ready to assist.

Why do seniors downsize? Generally speaking, elderly individuals find they have more space than is necessary as they reach a certain point in life. The amount of home you need usually shifts depending on your needs, and our needs change over time. Many adult children of the elderly live in their own spaces, and furthermore seniors may find the extra amount of house no longer necessary.

What are the benefits of downsizing? Let’s now analyze the benefit of downsizing by category. The three main benefits are we’ll discuss are financial returns, health incentives and extra time for more leisurely activities.

  1. Financially speaking, downsizing makes sense. It’s no secret that the larger and more elaborate your home, the more money you will have to funnel into its upkeep. Senior citizens may find their finances have become slightly more restrictive after retirement, as is the norm. Not only will you make money off of the sale of your home, but downsizing often involves the sale of your furniture. This a good opportunity to make a hefty chunk of change from an estate or yard sale. Additionally, smaller homes are usually less costly when it comes to heating, cooling, and powering. Utilities will almost always be cheaper.
  2. Health issues can be stressful for seniors as they age. Living in a multi-story, family home, is not always practical for elderly individuals who have major health issues. Poor health often causes enough stress as is, without having to worry about the upkeep of a larger home. Not to mention, those with health issues, particularly as it pertains to mobility, may find moving around comfortably in their home to be increasingly more difficult. A smaller space will greatly benefit an elderly person who is struggling with getting around. A one-story home is a great way to minimize mobility related stress. If your health issues require round the clock care, retirement homes can benefit the elderly greatly, as they provide a safe environment should senior’s need assistance.
  3. The money you save on your home can be channeled into more leisurely activities. Downsizing can allow for more time to focus on leisurely activities and hobbies. For many, retirement opens up the opportunity to indulge in travel. If you choose to downsize, the money you save can be channeled into travel, hobbies, and more time for enjoyment. The money you would spend to help maintain a property, can be turned into fun money.

If you’re worried about the emotional aspect of downsizing, that is normal and to be expected. Although downsizing can mark the beginning of a new chapter, it can still be bittersweet for many senior citizens. Our homes serve as reminders of memories, and over time we create strong emotional bonds to our spaces. It is normal to be hesitant about leaving a home especially in trade for the unknown. Take care of yourself during this time, and don’t be afraid to reach out for support.


Lastly, take your time and do the research to decide the best option moving forward.  Once you decided to downsize, take your time with the process. Find a new home or living space that makes sense for you needs, and allow yourself to try on a few different options.










10 Ways a Smaller Home Can Make You Happier and Reduce Stress

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Downsizing to a smaller home is not only cost effective, but can be pivotal in stress reduction. For senior citizens in particular, a smaller home can make a massive difference.

  1. A smaller house means more income to channel into other activities. Larger homes often require far more upkeep. From landscaping to utilities, the more space you have, the more money you’ll undoubtedly have to spend on the upkeep. A smaller home helps combat these higher costs. Additionally, this money can be channeled into leisure activities such as traveling, buying a new car, shopping, etc.


  1. Not only will you save money on upkeep but you’ll save money on your mortgage as well. Mortgages can be the biggest financial drain depending on where you live and the value of your home. Downsizing, especially for seniors, may significantly reduce your mortgage payment or eliminate it all together. Not having the imminent mortgage payment hanging over you is a stress reliever in itself. Any mortgage you have, should you choose to downsize, will be significantly less than your previous one.


  1. Less space is a secret benefit of downsizing. For many, it may be hard to conceptualize how less space could possibly be a benefit. However, for senior citizens especially, it may make all the difference. Less space can help in reducing unnecessary clutter or items you have accumulated over the years. When you downsize from a larger home to a smaller home, you will likely have to spend some time deciding what stays and what goes. Decluttering is a great way to clear your physical space, and in term clear your mental space.


  1. A new home offers a clean slate. While starting anew can be daunting, it also allows for a clean slate and a fresh start. Our homes are more than just our living spaces, they hold our memories both good and bad. A new home can serve as a bookmark for a new chapter in life. This is doubly true for senior citizens who are settling into retirement, and/or less responsibility.


  1. If you’re a fan of decorating or interior design, a smaller home offers many options to be creative. Decorating a new space whether bigger or smaller can be fun in itself. With downsizing, you can pay more attention to each individual space, without having to worry about breaking the bank. You may also find that your budget can go much further in each space, if you only have half the rooms to worry about. With less space, you can also find unique and innovative ways to combine décor and storage.


  1. For seniors with mobility issues, a smaller home can make a world of difference. Having to navigate a large space when you have mobility issues can be a gigantic stressor, especially for senior citizens. In smaller homes, seniors may find it exponentially easier to travel from room to room. A smaller home allows for a more accessible mobility system, particularly if the home is only one story.


  1. A new neighborhood lends itself for new adventures. Have you ever wanted to live in a neighborhood, but couldn’t find a house in that area that fit your specific needs? Perhaps, on average, the homes were beautiful but didn’t give you the space you needed for a growing family. With less space, comes less requirements for housing. You can now revisit neighborhoods you wrote off earlier. New neighborhoods can give a new sense of community.


  1. For seniors, they may find a neighborhood that is more reflective of their demographic. Certain neighborhoods often are more desirable to certain populations. Seniors in particular may find themselves more comfortable in an area with individuals in the same life phase. Family neighborhoods can often get more traffic and noise, than say neighborhoods where the population has more seniors.


  1. Buying a smaller home also helps to reduce your environmental footprint. Not only does buying a smaller home benefit you, but the environment at large. You will need less energy and utilities for the upkeep or a smaller home, which in return means less materials used in general. Small houses are also generally built in more walkable areas, which means you can save gas and minimize pollution by taking a walk versus getting in the car.


  1. When it comes time to clean the house, you’ll save a lot more time. If you’ve ever done a deep clean on a home, you know how time consuming and stressful it can be. The less space you have, the more easily you can clean the home. In fact, you may find a deep clean is less necessary as you may more consistently sanitize a smaller house. Additionally, with less rooms comes less opportunity for spaces to sit dormant and gather dust. The stress of having to do a big overhaul cleaning is a thing of the past!


5 Big Benefits of Living in a Small House

9 Surprisingly Big Benefits of a Smaller Home

More From Less: The Benefits of Downsizing


When is it Time to Downsize Your Home?

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Downsizing is often a top priority for many retirees. It’s natural for the senior citizens to want to consolidate their space and the belongings within it. Here are some useful tips for knowing the ideal time to downsize:

Assessing your living situation is an excellent place to begin. Every family is unique in terms of its makeup. Do you live alone or with a spouse, your children, or other members of your family? If you live with other individuals it’s wise to assess how downsizing may affect those that you live with. How can you successfully ensure that all who live in your space will be accommodated and, can alternative arrangements be made if necessary?

Prioritize your desires in retirement. Many retirees make changes to their financial goals. It’s normal for senior citizens to make less money after they enter retirement. Selling your home can be a fantastic way to cut costs and downsizing begets many new opportunities such as traveling and family vacations.

Is downsizing a wise financial decision? Usually, yes, however it’s important to keep in mind that selling a home may require some financial investments. In addition to potentially hiring agents and other relevant services, seniors may find they need to make adjustments to their homes to increase their overall sale value. If you’re in a financially viable place to do so, then downsizing certainly makes sense. Review your financial needs and goals before deciding to downsize.

Downsizing looks different for everyone. Every retiree has different goals when downsizing. Some senior citizens may find they want to migrate to a warmer, more temperate climate. Of course, cost of living varies by location, and downsizing may be costly if an out of state move is the end goal. For others, staying close to family and having access to important relationships takes precedent. Life will undoubtedly change regardless of where you relocate, therefore mapping out your specific goals and needs will help cultivate an easy transition.

Health concerns vary by individual, and should be taken into consideration. Many aging individuals may experience mobility problems. Is your current home ideally structured for any existing medical conditions you may have? It may be in your best interest to stay put if your home is ideally structured. Downsizing could potentially take you further away from medical care, and doctors you feel comfortable with. It may be more beneficial to make adjustments to your home rather than downsize.

Get a second opinion. Realistically speaking, how much is your home really worth? When we see the neighbors make a generous profit off of their sale, we can become overly optimistic about the value of our home. Getting your home appraised is a surefire way to get a realistic estimate. Your home may be worth less than you anticipated, or in certain circumstances, worth more. It’s always wise to be informed of the trends in your area. Maybe you’ve decided, without question, you will downsize. Certain times of year tend to be more profitable than others for selling. Reaching out to a professional can help you get more concrete information and answers.

Do the signs point to downsizing? Here are some telltale signs that downsizing may be worth considering. If the maintenance on your home is starting to become too financially and emotionally strenuous, you may want to consider a change. Large homes are naturally more difficult to maintain, and many senior citizens may desire a more maintainable home. This is especially relevant if you have recently retired as many retirees are often looking to spend less time on matters of home upkeep.

Seniors who live alone may desire living in a retirement community. While some senior citizens prefer solitude, others may be looking for a more vibrant community. Retirement communities offer an enriching environment for elderly individuals. If your neighborhood is full of young families, perhaps looking into a location with likeminded neighbors is a top priority.

Experiencing a variety of emotions is natural. Thoughts of downsizing can bring up unexpected emotions. Our homes are our ultimate spaces of comfort, and places where we create memories with loved ones. Downsizing may be emotionally strenuous, and leaning on others for support can help ensure a happy and healthy transition.








Reverse Mortgages

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Seniors looking for additional income may find applying for a reverse mortgage a lucrative option. However, reverse mortgages can change your finances both positively and negatively. Here are some helpful tips to know if a reverse mortgage is right for you:

For starters, what is a reverse mortgage? Reverse mortgages are exclusive to senior citizens, allowing for them to receive a mortgage payout based on their home’s current equity.

How do they work? A reverse mortgage allows for borrowers to access a portion of their home’s equity and use their home as collateral. In most cases, the loan does not need to be repaid until the homeowner moves, or the property is otherwise vacated. As long the home is occupied, the owner is not required to make any monthly payments towards the loan balance.

Are you eligible? Citizens 62 and up can apply for a reverse mortgage.

There are a few key benefits that can be gained from reverse mortgages, but they work best for people in specific circumstances. For example, reverse mortgages make sense for homeowners who are not looking to move in the near future. If you are contemplating a move, it’s not particularly wise to apply for a reverse mortgage. If you are able to keep up with your home’s maintenance and taxes, reverse mortgages are also worth considering for supplemental income. Assessing your current financial situation can help determine if a reverse mortgage is right for you.

Reverse mortgages are calculated differently for everyone, depending on various factors. These loans are more profitable for certain people, as they are usually calculated based on the value of your home, interest rate, and appraised value. Generally, the older you are and the more valuable your home, the higher a loan you will be eligible for.

How can a reverse loan financially impact me positively? There are no monthly payments from the borrower. The proceeds from the loan can be ideal for paying off debt or the existing mortgage of the house. Additionally, they can provide a monthly cash flow, you would not receive otherwise.

There are still drawbacks to consider. When it does come time to vacate the home, you may be faced with high closing costs. A borrower must also maintain the house and pay property taxes and homeowners insurance. A reverse mortgage is ultimately derived from a key asset of your estate. The only reverse mortgage insured by the U.S Federal Government is called a Home Equity Conversion Mortgage or HECM. A HECM requires multiple other fees and charges according to HUD (U.S Department of Housing and Urban Development)

How do I receive money from a reverse mortgage? Reverse mortgages can be distributed in a variety of different ways such as a lump sum payment, line of credit, or monthly payout. If you choose to move forward with a loan, decide which is the most financially viable option for you.


Who should not seek a reverse mortgage? If you are struggling to keep up with the monthly payments of your home, a reverse mortgage will not be profitable. If the home is no longer your primary residence after a 12-month period, you will need to immediately repay the loan. Either by repaying the loan outright, or putting your home up for sale to settle the cost.

Is a reverse mortgage right for me? If you’re still wondering if a reverse mortgage is profitable for you, it’s time to do more research. Reverse mortgages depend on a variety of factors, and come down to an individual’s specific circumstance.

Where can I locate an FHA approved lender or HUD approved counseling agency?