FACTS VS. FICTION Reverse Mortgages

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IN THE SPOTLIGHT Foothills Place

We are pleased to announce our newest advertiser in the 

SPOTLIGHT Senior Services & Living Options Guide

“Foothills Place is a pet-friendly senior living community where we provide residents with quality care and assistance with their daily routine when needed, while promoting independence as long as possible.

We develop individual care plans to meet the needs of each resident, and a full-time licensed nurse is available 24 hours a day to provide clinical oversight and coordination of care.

Situated in the southern foothills of the Santa Catalina Mountains and minutes from Rillito River Park, our community provides an ideal senior living setting with the natural beauty and the upscale amenities in the area.

In order to provide our residents the opportunity to thrive in body and mind, we design engaging excursions and activities tailored to keeping everyone young at heart, be it Pokeno, Bingo, Bridge Club, Computer Club or Classic Movies, there are various activities to connect you with friends.

Our community offers Alzheimer's and dementia care in addition to our Assisted Living accommodations, so you can have greater peace of mind that your loved one will receive supportive memory care on-site if the need arises.”

Schedule a visit to explore Foothills Place today!

Visit us online @ http://www.enlivant.com/communities/arizona/foothills-place-tucson 

Could a Reverse Mortgage Save Your Retirement?

As baby boomers retire at the rate of 10,000 per day, many of them are woefully underfunded for their future retirement needs.

While reverse mortgages have gotten a bad rap over the last decade, the product has changed and become more regulated. Reverse mortgages are now gaining a lot of attention as a viable option for retirement income.

Most people tend to underestimate their life expectancy, save less than they should and fail to consider how much health care might cost in retirement, says David W. Johnson, associate professor of finance at the John E. Simon School of Business at Maryville University in St. Louis.

[See: 7 Stocks to Buy for the Baby Boomer Retirement Wave.]

"Although we are living longer, we are also experiencing more health issues with our increased life expectancy," Johnson says. "The typical 65-year old couple will need $305,000 to cover out-of-pocket health care costs over their lifetime. Most people have not planned for these type of expenses. Increased life expectancy and unexpected expenses increase the possibility of outliving your assets."

As baby boomers move into retirement without sufficient income sources, many Americans are going to be unable to meet their basic financial needs in retirement, says Jamie Hopkins, associate professor at The American College of Financial Services in Bryn Mawr, Pennsylvania, and co-director at the New York Life Center for Retirement Income.

"This retirement income shortfall is nothing less than a crisis facing the United States," Hopkins says.

Reverse mortgages are another tool in the retirement toolbox that could offer seniors cash flow needed to cover living costs. Admittedly, Americans have a strong negative bias toward reverse mortgages, Hopkins says.

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"Much of that negative bias is rooted in misconceptions and issues with bygone reverse mortgage issues. The reverse mortgages of today are not the same as reverse mortgages 10 year ago. As such, reverse mortgages deserve a second look today," Hopkins says.

"Reverse mortgage loans are one of the most misunderstood financial products in existence," Johnson says.

One of the most common misconceptions is that the bank will own your home if you take out a reverse mortgage, says Reza Jahangiri, chief executive officer at the American Advisors Group in Orange, California.

"In actuality, with a reverse mortgage loan, borrowers retain ownership of their home, as long as they stay current on their property taxes, homeowner's insurance and otherwise comply with the loan terms," Jahangiri says.

"I believe in the product enough that I recommended a reverse mortgage for my own parents. I have seen firsthand how a reverse mortgage made a difference in the quality of their lives during retirement," Johnson says.

The market has become simplified in recent years. The Home Equity Conversion Mortgage is used for nearly all reverse mortgages, Hopkins says. It is essentially a government loan sold by private companies.

"The HECM is extremely well regulated. However, that does not mean there are not differences between companies," Hopkins says. "You should still shop around for the best rate, lender, service, and fees."

[Read: 6 End-of-the-Year Retirement Planning Tips That Will Save You Money.]

For most seniors, the majority of their wealth is stored in their home, which is not a very liquid asset. A reverse mortgage is a way for homeowners to unlock some of the equity in their home without having to make monthly mortgage payments.

Who is eligible? To be eligible for a Home Equity Conversion Mortgage, you must be a homeowner 62 or older, own your home outright or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan. You need to have sufficient financial resources to pay for property taxes and insurance, and you must live in the home.

"The loan becomes due and payable when the last remaining homeowner leaves the home permanently," Jahangiri says.

A reverse mortgage is a non-recourse loan, as the home is the only collateral that can be used to repay the loan balance.

"This means that if the sale of the home does not cover the entire loan balance, then FHA pays the difference, not the borrower's family," Jahangiri says.

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How much could a borrower expect to receive? "Depending on their age, homeowners typically can tap between 50 percent and 75 percent of the home's appraised value, with a maximum loan limit of $625,500. The older the borrower and the lower the interest rate, the higher the available loan amount," says Tom Dickson, national leader financial advisor channel at Reverse Mortgage Funding in Bloomfield, New Jersey.

Another option that's growing in popularity is one where a borrower takes out a reverse mortgage standby line of credit, Jahangiri says. "This is a great option for borrowers who aren't interested in tapping their equity unless an emergency arises or when they feel the funds are needed," he says.

Tapping into your home equity through a reverse mortgage HECM line of credit can be an effective way to avoid selling your investments when they drop in value, Hopkins says.

"Let's say the market drops 30 percent next year. Would you rather sell your stocks that are down 30 percent to get your retirement income or would you rather borrow from your home equity at 3 to 4 percent interest? The answer is clear," Hopkins says. "You would be much better off using your home equity in a down market year. Doing this could substantially increase the sustainability of your retirement portfolio and help make your money last for a lifetime," Hopkins says. 

Repay loan to keep the house. If leaving your home to your heirs is important to you, a reverse mortgage may not be the best option.

"As home equity is used, fewer assets may be available to leave to your heirs," Dickson says. "It should be noted that you can still leave the home to your heirs, but they will have to repay the loan balance." Just like any other financial product, it is important to educate yourself before you sign on the dotted line and it can pay to shop around.

There are about 10 reverse mortgage companies that do almost all the business in the industry, Hopkins says.

[Read: Your Home is a Better Investment Than Bonds.]

"Just like with a traditional mortgage you need to shop around," he says. "LendingTree.com can allow you to do that. Check out at least three reverse mortgage companies before moving forward with one."

Visit Robin Loomis on Facebook @  http://www.facebook.com/reversemortgageaz or visit us online at our website www.NovaReverse.com

IN THE SPOTLIGHT Sonora Behavioral Health

We are pleased to announce our newest advertiser in the 

SPOTLIGHT Senior Services & Living Options Resource Guide

Sonora Behavioral Health  is located on the north western end of Tucson, Arizona close to the Catalina Mountains and next to the major north/South I-10 Freeway. 

Sonora Behavioral Health is licensed for 72 beds and with the addition of the new 76 bed unit coming online in November we will ultimately offer 144 inpatient psychiatric beds.

Sonora Behavioral Health’s mission is to provide superior behavioral healthcare to the individuals and communities we serve. Children (5-11), adolescents (12-17), adults and military personnel in crisis situations can benefit from our broad scope of programs. Our services include inpatient hospitalization for crisis stabilization, partial hospitalization and intensive outpatient programs for continued learning and skill development for living with mental illness and/or addiction.

Sonora believes that mind and body are inseparable and that our responsibility is to treat the whole person in the knowledge that pathology in one affects the level of functioning in the other.  We believe that the human being is a delicate balance of emotional, intellectual, physical, cultural, and spiritual dimensions.  Psychiatric disorders result in disturbances in cognitive, behavioral and affective processes.  These disturbances impair the patient’s ability to perform basic life functions and severely disrupt family, social, and work relationships, which can be ameliorated by prompt psychiatric care.

Sonora Behavioral Health Hospital is committed to the provision of quality behavioral health services to our community.  This commitment is demonstrated through the facility’s mission and supported through effective strategic and budget planning efforts.  Resources are utilized to meet individual patient, family and staff goals in the most effective and efficient manner possible.  Best practices firmly rooted in evidence and most current information available about human behavior have been incorporated into the plan of care for each program.

Sonora provides a total therapeutic environment through an individualized treatment program for each patient.  Modalities emphasized are group, family, educational, and activity therapies, with a focus on the patient as a unique individual.  Care is provided according to an established code of ethical conduct and strict adherence to patient rights.  Involvement of the family, whenever possible, is encouraged to promote support for the patient’s recovery.

Patient care is evidence-based and centered upon a holistic philosophy meeting the full continuum of care.  Resources are organized around each patient through the development of an individualized, comprehensive treatment plan.  The patient’s strengths provide the cornerstone of the treatment plan and are mobilized from admission, throughout hospitalization and into discharge.  Responsibility for the well-being of the patient is transferred to the patient’s hands as soon as possible.

Visit us online @ www.sonorabehavioral.com

IN THE SPOTLIGHT ~ The Echelon of Tucson

We are pleased to announce our newest advertiser in the 

SPOTLIGHT Senior Services & Living Options Resource Guide

Aging Gracefully Philosophy  

The quality of life our residents enjoy is at the core of our mission. Research
shows that activity, both physical and mental, can improve the overall quality of life.
Our goal is to create a whole person wellness attitude and change how we think
and act in relation to our residents. “Aging Gracefully” is not a “program,” but rather the embodiment of an attitude about the quality of life we provide our residents. It is the
platform upon which family members and staff alike participate to present those
attributes that will allow the residents to rediscover the joy available in life.

All Day Dining Program    

What time is dinner? . . . “whenever you choose.”
The All Day Dining Program is a unique concept designed to provide our residents
 the freedom of choice.   Options like breakfast for dinner or lunch at 2:00 pm rather
than noon.  Whether an early riser or late sleeper, All Day Dining offers the flexibility
 to choose what works best for you.

All Day Dining offers an alternate menu of choices that may include the main
entrée of the day, breakfast items, soups, salads, sandwiches, etc.

Graceful Stays – Short Term Stays – Perfect for Snowbirds!

 “Graceful Stays” gives you the option to try us before making the commitment
to move in.  “Graceful Stays” is also perfect for folks interested in spending a few
 months in Tucson in an effort to escape the bitter winter cold.  All you have to bring
is your clothes! Participate in our enriching activities program, enjoy our delicious
cuisine and get to know your neighbors.  Call for pricing and more information
regarding your upcoming “Graceful Stay.”

Visit us online @ http://www.echelonoftucson.com/

How Your House Can Save Your Retirement

Worried you’re going to run out of cash in retirement? The solution to your problem may be closer than you think.

After Joyce Ruvolo's husband passed away two years ago, she noticed a disturbing trend. "I found myself taking money out of the bank every month to pay the bills," says the 77-year resident of Boca Raton, Florida.

Unhappy with her cash flow situation, Ruvolo found a solution to her problem with Kathy Burns, a reverse mortgage loan specialist with On Q Financial. Burns helped set up a reverse mortgage, also known as a home equity conversion loan, which allowed Ruvolo to tap into the equity in her house and receive regular payments to supplement her income. "Kathy was wonderful, and the e

extra money I have in my pocket at the end of the month makes up the deficit I had before," she says.

[See: 10 Ways to Reduce Your Housing Costs in Retirement.]

Ruvolo's situation isn't unique, and finance experts say the biggest asset many seniors have is their home. By leveraging its value, those who are facing the prospect of afinancially rocky retirement may find they can live comfortably instead.

Using a house as a retirement fund. With traditional pensions disappearing and Social Security payments remaining relatively flat thanks to the current low-interest economic environment, some say home equity is the logical place to look for money in retirement. "Where have they saved most of the money in their life?" says Jamie Hopkins, an associate professor of taxation at American College and co-director of the New York Life Center for Retirement Income. "It's in their home."

ADVERTISING

To tap into the value of their house, seniors could use one of the following products or strategies:

• Reverse mortgage
• Home equity line of credit
• Downsizing
• Home-sharing

Of these, reverse mortgages may be garnering the most attention. These loans allow seniors age 62 or older to receive payments based upon the value of their home and their age. Once the borrower passes away or moves out of the house, the loan must be repaid, typically within a year. To do so, the house may be sold or the loan refinanced in a conventional mortgage.

[See: 50 Affordable Places to Buy a Retirement Home in 2016.]

Not your 1980s reverse mortgages. While seniors like Ruvolo have warmed to reverse mortgages, others may be reluctant to sign up for a product that, in decades past, gained a reputation for saddling people with expensive loans that were inappropriate for their circumstances. However, Hopkins says that has changed. "It's not the reverse mortgage that existed in the 1980s."

Reza Jahangiri, CEO of reverse mortgage lender American Advisors Group, says today's loans come with consumer protections, such as financial counseling and a financial assessment, which weren't a part of older loans. What's more, these are non-recourse loans which means no one will end up paying more than a property's value. "If the loan amount is greater than the home value, the heirs aren't responsible [for the difference]," Jahangiri says.

Interest rates may be higher for reverse mortgages than for other mortgage products, and the loans may not make sense for seniors who expect to sell or move within the next few years. However, for those with small retirement funds and limited options, a reverse mortgage may make sense. "We have a mushrooming demographic of seniors, life expectancy is up and the savings picture is not robust," Jahangiri says. "It's become a reality that the reverse mortgage has become part of retirement planning."

[See: 10 Retirement Hot Spots in the U.S.]

Keep communication open with family members. Since a reverse mortgage could require the sale of a family home, seniors should keep their adult children aware of their plans. "It's very important they discuss it with their family," Ruvolo says. While children can't prevent a senior from taking out a reverse mortgage, keeping everyone informed avoids unpleasant surprises during a time of grief.

If family members don't want to lose the home, there is always an option to do a private reverse mortgage. These loans need to be professionally set up to avoid gift taxes, but they allow an adult child or other family member to make payments to a senior in exchange for equity and eventual ownership of the property. "The caveat is it's not common for kids to be in a position to advance hundreds of thousands to their parents," Jahangiri says.

For those who decide not to take out a reverse mortgage, taking out a home equity line of credit, selling a home or downsizing to a smaller residence are all ways to find the cash needed to boost meager retirement funds. "Figure out what you want in retirement," Hopkins says. "Once you figure out your goals, you can use [your house] to help you meet them."

Visit Robin Loomis on Facebook @  http://www.facebook.com/reversemortgageaz or visit us online at our website www.NovaReverse.com

Should You Use a Reverse Mortgage to Pay Off Your Traditional Mortgage?

Older homeowners who are ready to say goodbye to the burden of a mortgage payment may consider paying off their traditional home loan using their home's equity -- through a reverse mortgage.

Reverse mortgages have gained a somewhat dubious reputation over the years, but they can be a useful financial tool for seniors when used appropriately, says David Johnson, associate professor of finance at the Maryville University in St. Louis.

1. Reverse mortgage

A home equity loan in which the borrower is not required to make payments. The homeowner must be at least 62 years old. A reverse mortgage accrues interest and doesn't have to be repaid until the homeowner dies or moves out of the house. The Federal Housing Administration, or FHA, calls it a HECM, for home equity conversion mortgage.

Not only for the desperate

"Years past, financial planners didn't view reverse mortgages as a planning tool," says Johnson, who co-authored a study discussing the growing importance of reverse mortgages in retirement. "It was viewed as a last resort, and they assumed that the only people that do reverse mortgages are people that are desperate. Clearly that's not the case, and I think they are starting to view it differently now."

ADVISER SEARCH: Curious about reverse mortgages? Find a financial adviser today to help you make the right decision.

Why get a loan when you already have one?

One of the most common reasons homeowners get a reverse mortgage is to pay off their existing mortgage so they have more income to work with, says Maggie O'Connell, who runs ReverseMortgageStore.com.

"They already have this debt on the house, so instead of making their mortgage payments, they are just paying it out of their equity before they leave the home," she says.

What it takes to get a reverse mortgage

To qualify for a reverse mortgage, the homeowner must be at least 62 years old and have sufficient equity in the house. The size of the loan depends on the value of the home, the age of the youngest borrower and how much is owed on the house. The owner must pay property taxes and insurance.

2. Hypothetical examples of paying off a mortgage with a reverse mortgage

Robert is married to Linda, who at 62 is the younger spouse. Their house is worth $200,000 and they owe $62,000 on the mortgage.

Based on their ages and the home's value, they can get a reverse mortgage for up to about $104,800. This is known as the principal limit or maximum loan amount. Closing costs, including FHA initial mortgage insurance, reduce that available amount to about $93,800.

Under FHA rules, the amount they borrow is limited in the first year. Borrowing the $62,000 to pay off the mortgage, they can take out another $10,400 in cash during the first year. A year later, the remainder is available to them.

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Barbara is a 75-year-old widow with a house that's worth $400,000. She owes $25,000 on a home equity line of credit, with no other mortgage debt.

Based on her age and the home's value, she can get a reverse mortgage for up to about $245,600 (the principal limit). Closing costs, including FHA initial mortgage insurance, reduce the available amount to around $234,900.

Under FHA rules, she can get a reverse mortgage, pay off the HELOC balance and take out up to around $111,600 in cash during the first year. A year later, the remainder would be available to her.

Visit Robin Loomis on Facebook @  http://www.facebook.com/reversemortgageaz or visit us online at our website www.NovaReverse.com