For years, reverse mortgage originators have been telling borrowers that reverse mortgages are "non-recourse". They could never owe more than their house is worth at the time the loan is paid back. The Merriam-Webster Dictionary defines non-recourse as being or based on an agreement in which the lender has no right of recourse to the borrower's assets beyond stated limits.

Considering a reverse mortgage? Here are some questions to ask your self first. It's quoted time and time again; over 95% of seniors want to live the duration of their retirement years in their own homes. Often consumers will start their research on programs, costs and numbers. I propose that if you are looking at using a reverse mortgage to improve and enhance your retirement lifestyle, you ask yourself a few questions before you consider reverse mortgage program numbers and costs.

• Is this the house I plan on staying in for the rest of my life?

• Is this a house that I can afford to stay in the rest of my life?

• Will it need a new roof, painting or a new furnace? Do I have the funds for this or will it be a struggle?

• Can I easily pay my property taxes?

• Can I maintain my home myself or do I have the resources to have my home maintained for me? Handyman work, house cleaners, laundry and grocery shopping etc.

• Or if I don't have the financial means to pay for these things when I either don't want to or can't do them, do I have reliable family or friends that are willing to help me as I age?

• Do I have the emotional, physical & financial resources to stay in this particular house?

• Are my bedrooms upstairs? If I am injured or have arthritic knees, will I be able to move about the house safely?

• Do I have more house than I really want?

• Would it make sense for me to down size?

• Would it make sense for me to move closer to my son or daughter?

• Would I be better off if I sold my home, added my profits to my retirement resources and buy a smaller home with a reverse mortgage?

• By staying in this house will I able to maintain my independence and set myself up for healthy aging on all levels or should I consider downsizing?

Potential Downsizing examples for Mr. & Mrs. Anderson moving from a $700k valued home to a $430k valued home and Mr. & Mrs. Jones moving from a $420k valued home to a $300k valued home:

Mr. & Mrs. Anderson are both ages 68. The Andersons own a home valued at $700k and they owe $220k. After commissions, closing costs, mortgage payoff & moving etc. the Andersons retain an estimated $430,000 from their sale. Instead of paying cash for their new retirement home, the Andersons either:

A. Purchase a $430,000 home with a reverse mortgage put down a one time payment of $180,000 and have no house payments for the life of their loan. They also take the balance of $250,000 as principal residence tax exempted proceeds (Internal Revenue Code 121 principal residence sale tax exemption; consult your tax advisor).

Or

B. Purchase a $430, 000 with a reverse mortgage and set up a credit line that is liquid and tax free when accessed. The unused portion of the credit line grows at the same rate as the loan rate, this gives the Andersons approximately a $250,000 credit line and every year has access to more money guaranteed.

Mr. & Mrs. Jones are both ages 68. The Jones's own a home valued at $420k and they owe $40k. After commissions, closing costs, moving etc. the Andersons retain an estimated $350,600 from their sale, moving and mortgage payoff. Instead of paying cash for their new retirement home, the Jones's either:

A. Purchase a $300,000 home with a reverse mortgage, put down a one time payment of $119,000 and take the balance of $231,600 as principal residence tax exempted proceeds (Internal Revenue Code 121 principal residence sale tax exemption; consult your tax advisor). The Jones's will have no house payments, purchasing with a reverse mortgage.

Or

B. Purchase a $300,000 home with a reverse mortgage and set up a credit line of $181,000 that is liquid and tax free when accessed. The remaining balance of $50,600 is taken as principal residence tax exempted proceeds (Internal Revenue Code 121 principal residence sale tax exemption; consult your tax advisor). The unused portion of the credit line grows at the same rate as the loan rate; this gives the Joneses an approximate $181,000 credit line. This credit line grows at the same rate as their loan rate. Every year they will have access to more money guaranteed.

If you have a reverse mortgage question, CALL Angella Conrard at 866-949-7030 or log onto www.reverse-your-mortgage.com.

Purchasing a home in your retirement years just became easier for seniors looking to move, downsize or upsize with no credit score requirements or house payments for the life of the loan. HR. 3221, signed into law last summer has a provision for using reverse mortgages for home purchase that is projected to take effect January 09'.

HUD just issued a mortgagee letter describing the guidelines on how to purchase a home with a government insured reverse mortgage. Various lenders offer variable and fixed rate HECM reverse mortgage programs. Your reverse mortgage advisor should discuss your goals and present the current program choices that are available to you.

How do your purchase with a reverse mortgage? How do they work? Homeowners or potential homeowners qualify for reverse mortgage proceeds based upon the youngest borrower's age and the appraised value of the home. In a home purchase with a reverse mortgage it works the same.

For example: A 68 year old borrower can purchase a $400k home with a down payment of $155k-$206k depending on the program chosen (programs vary with current interest rates, indices, variable or fixed loan programs) and have NO PAYMENTS for the life of the loan.

This is a powerful cash flow tool for seniors. HUD has issued some guidelines in their mortgagee letter. Given our recent history these guidelines are in place to protect the borrowers, avoid fraud, abuses and property flipping.

Here are some of the guidelines:

• Newly constructed homes must be completed and a Certificate of Occupancy must be issued prior to closing.

• Homeowners must occupy their purchased home within 60 days of closing.

• Lenders must verify funds prior to closing, closing funds can be from the sale of a previous residence.

• There can be no bridge loans or "gap" financing to meet the down payment or cash requirements of a reverse mortgage for purchase.

• Reverse Mortgage counseling is required for all potential borrowers.

• There is no three day right of rescission period in a reverse mortgage for purchase transaction.

• When closing no other liens against the property can exist.

• Any resale of a property may not occur 90 or fewer days from the last sale. Other provisions apply.

HUD decided to base reverse mortgage for purchase proceeds on the appraised value of the home. In the past, reverse mortgage programs that allowed home purchasing were based upon the lesser of appraised value or purchase price. With HUD's new HECM for purchase guidelines, a borrower can potentially put down fewer proceeds if their future home appraises for more than their purchase price.

Reverse mortgages for purchase is another tool for seniors to improve their retirement lifestyle by putting more money in their pocket each month by potentially downsizing, moving closer to kids & eliminating burdensome home maintenance. Just as a family can outgrow a home and need more space, in your retirement years it may make more sense to move to a lower maintenance, mature friendly home in size and floor plan. Reverse mortgages for purchase are an excellent idea and option for aging seniors and in the future boomers. If you have a reverse mortgage question, call Angella Conrard, Reverse Mortgage Advisor at 866-949-7030 or log onto www.reverse-your-mortgage.com

Click Here to calculate how much home you can borrower with a reverse mortgage.

The house is big, the kids are gone, you're tired of maintaining the yard and you and your spouse only use half of the house. Could it be time to move and at the same time increase your retirement nest egg and cash flow?

The passing of HR. 3221 and the modernization of FHA and reverse mortgages is a step in the right direction in helping boomers and seniors plan for their retirement. The improvement is yet to be measured but here are some interesting thoughts.

Within the last couple of weeks the president signed into law HR 3221. Amongst many things, this law will do is dramatically change reverse mortgages. It will:

•o   Increase the loan limits for reverse mortgages (limits have yet to be defined publicly by HUD) - which means more liquid cash for reverse mortgage recipients.

•o   Capped origination fees - 2% of the first $200k of the maximum claim amount, plus 1% of the balance above $200k to a maximum origination fee of $6000. On average this will reduce origination fees by over $1200 for Southern California reverse mortgage borrowers.

•o   Enable to use the FHA HECM reverse mortgage for HOME PURCHASE

•o   Enable the FHA HECM reverse mortgage to used on co-ops, amongst other improvements

In 1986, California voted to provide tax relief (Proposition 60) to homeowners older than 55 by allowing (with some restrictions) to transfer their existing property tax base to replacement homes of the same or a lesser value within the same county or a participating reciprocal county (Proposition 90). As the boomers begin to retire and look to trade into smaller, age friendly single story homes, or consider 55+ communities, using this proposition may become more popular. You can use this benefit one time.  There are numerous restrictions including a single person or spouse must be 55 years old when selling your original property. Your new property must be a principal residence with the current market value equal or less than your original residence. Proposition 60 covers property transfers within the same county. Proposition 90 allows property tax base transfers with participating counties of Alameda, Los Angeles, Orange, Santa Clara, San Diego, San Mateo and Ventura counties. Be sure to contact your tax assessor's office for current information.

Taxpayer Relief Act of 1997 changed the way real estate capital gains taxes are calculated. The IRS issued updates in 2003. This rule offers up to $250,000 tax free sales home profits for a single person and up to $500,000 profits for a couple. To qualify the seller must have owned and occupied their principal residence a total of two of the five years before the home sale. (Consult your tax expert for updated advice)

Even with today's softened housing market, many home owners have substantial equity in their homes. There is an opportunity to take advantage of these gains and improve your retirement plan with multible opportunities.

Here is an example:

Mr. & Mrs. Jones both age 70, sell their current home for 1 million in Los Angeles County; Original cost of home: $250,000; Mr. & Mrs. Jones decide to buy a home for $500,000 in Ventura County.  Gain on the sale: $500,000; Exclusion for couple filing jointly: $500,000; Taxable gain: $0. Mr. and Mrs. Jones transfer their original property tax base with them, keeping their original property tax base. They take their $500,000 exemption and buy their home in Ventura County with a FHA HECM reverse mortgage. The FHA HECM reverse mortgage allows them to either pay $300,000-$320,000 for their $500,000 home, they have no mortgage payment and they pocket the difference tax free. Mr. and Mrs. Jones may also purchase their new $500,000 home with a reverse mortgage and further increase their monthly cash flow by $6-700 a month buy opting for the tenure payment option for life.

All three of these opportunities will soon be available to many Southern California retirees. The capital gains exemption is available to everyone. As soon as HUD issues the green light, FHA reverse mortgages will be available for use in home purchases for borrowers 62+ years old, throughout the USA.

The Boomer generation turned 62 this year. With the increasing popularity and practical application of reverse mortgages into the main stream, it is not unreasonable to expect to see the incorporation of these and other cash flow tools in retirement planning on an increasing basis.

If you or someone you know has a question about reverse mortgages, call Angella Conrard, Reverse Mortgage Advisor at 866-949-7030 or log onto www. Reverse-your-mortgage.com

(Be sure to check with your financial and tax expert for advice in planning)

 FHA Modernization language included in Bill HR 3221

A major housing bill HR 3221 passed yesterday. The president has threatenened to veto it.
How does this affect seniors?

The reverse mortgage association NRMLA has been working on this legislation to help older homeowners for years! We need higher loan limits to help seniors.

FHA Modernization HR 3221 language includes:

•  co-ops eligible for HECM reverse mortgages
• permanently eliminating the volume cap on how many FHA reverse mortgages my be insured by HUD
• allowing HECM reverse mortgages to be used for home purchases -allowing a reverse mortgage to be used for down sizing. A senior will be able to use this mortgage for purchase, thus freeing up more cash for daily living and quality of life.
• Raise the loan limits to free up more equity for seniors in higher median home value areas.

If you have a question on reverse mortgages, please call Angella 866-949-7030 or log onto www.reverse-your-mortgage.com

Last Week Financial Freedom announced they were discontinuing their jumbo Cash Account product. The Cash Account was the first proprietary reverse mortgage jumbo introduced as reverse mortgages became accepted into the main stream market. The reverse mortgage market is similarly affected as the forward mortgage market. Investors are few, existing lenders are ultra conservative and borrowing less. Underwriting departments are questioning and at the very least desk reviewing all appraisals to verify values. In some instances, appraisal values are routinely cut by 10-20%. Home values are down, which means proceeds for reverse mortgages are less.

Sounds bleak doesn't it. Money may be tight; however there are some solid lenders, with good products when it is appropriate for the borrower.

1. Gold Reverse Jumbo by  Gold Reverse
2. Equity Plus Advantage by Senior Lending Network formally Lender Lead Solutions
3. Reverse Select by MetLife formally Everbank
4. Fixed for Life by 1^st Reverse

For details on any reverse mortgage product please call Angella Conrard directly at 866-949-7030 or visit www.reverse-your-mortgage.com.

FHA HECM Fixed Rate reverse mortgage is subject to the same guidelines as all HECM reverse mortgage. The loans are calculated on the county lending limit and vary from county to county. To find out the lending limit in your area go to: https://entp.hud.gov/idapp/html/hicostlook.cfm . There are a number of lenders that offer the HECM fixed reverse mortgage. Rates are quoted daily. A fixed rate reverse mortgage may sound appealing, after all you'll know exactly what you loan balance at any specific time during the loan period. However, consider that preferential rates are only available if the borrower takes the amount of proceeds they qualify for in a lump sum. A credit line or a tenure option is available but the rates will almost double by taking this option. The fixed rate generally is appealing to folks who do want a lump sum of money at closing or if the borrower owes a mortgage close to their qualified amount. One thing to watch for is if you do choose the fixed rate HECM, the loan rate does not lock until closing. This means amount of your proceeds will float until closing. If you owe an amount that is close to the amount you qualify for, one of the adjustable rate mortgages might be a better option. Many lenders offer a HECM reverse mortgage that adjusts either monthly or annually. These programs can lock your proceeds at the time of your application. HECM rates do not lock at closing however if the rates climb before you close, you will receive the maximum proceeds during your application period. It has also been suggested that if you choose a HECM adjustable reverse mortgage tied to the LIBOR index you will pay less in interest than if you choose a fixed rate HECM reverse mortgage.

For details on any reverse mortgage product please call Angella Conrard directly at 866-949-7030 or visit www.reverse-your-mortgage.com.

I recently took a tour of the COUNCIL ON AGING - Orange County (COAOC). The Council is an incredible resource that has been serving OC since 1973 as a 501 © (3). The Council mission is to promote adult empowerment, prevent abuse and advocate the rights and dignity of those experiencing health, disability and aging challenges. The Council serves 75,000 people annually with 48 staff members and 280 volunteers. To tour the Council call 714-479-0107, the Council is looking for people to volunteer or contribute.

Programs & Services

Long Term Care Ombudsman Services-State certified Ombudsmen visit nursing and residential care homes through out Orange County.

 Health Insurance Counseling & Advocacy Program (HICAP) - provides educational seminars, individual counseling & limited legal assistance with Medicare and related insurance coverage, as well as unbiased information and assistance with Medicare & insurance information.

 Financial Abuse Prevention Team - A private and public multidisciplinary team providing education and recommendations to appropriate agencies for investigation of financial abuse cases.

 Linkages - Links seniors and disabled adults with services and resources in the community so they may remain in their homes in safety & comfort.

Caring Connections Friendly Visitor Program - provides frail isolated older adults with healthy companionships, social interaction and nurturing relations to help them achieve optimal help.

 CEUs - Accredited continuing education programs provided for allied professionals and the community, to further support and care older adults and those who serve them.

Everbank was just recently bought by MetLife Insurance Company. MetLife is the second insurance company to buy a reverse mortgage company behind Genworth. Genworth bought Liberty Reverse earlier this year.

These purchases reinforce my thought that as Baby Boomers age you will see more and more highbred products customized to meet seniors and boomer retirement and cash flow needs. With rising costs and many being underfunded for retirement, our aging consumers will look for means and products to better their lives and support themselves. I think you will see long term care products attached to equity, life insurance attached to equity, products that will create cash flow, estate planning tools or a combination. Reverse mortgages in my opinion will be as common as forward mortgages or IRAs in the future.

Given these thoughts, Everbank offers all the FHA reverse mortgage products including the FHA fixed reverse mortgage. On the jumbo side, Everbank recently discontinued their reverse mortgage adjustable jumbo, and slimed down the "Reverse Select 1.0- 1.3". The Reverse Select 1.0 has no closing costs but can be expensive on the rate side. You do have the option to "buy" down your rate. The borrower has the comfort of knowing exactly what their rate and loan balance will be overtime. The product can be used for home purchase. A credit line for proceeds is not an option. Uniquely, there is an option for the borrower to take proceeds as a tenure option. The borrower may prefer this to create a steady income for life. As with all reverse mortgages, if the borrower owes anything on their property, the first mortgage must be paid off from the proceeds they qualify for. Partial prepayment is not allowed for the first year. Rates are not locked until 2 days before closing. The Reverse Select also has the equity protection option offered on other jumbo reverse mortgages. This means the borrower can preserve up to 50% of their equity and calculate their reverse mortgage proceeds on a goal amount depending upon their needs.

If you have questions on your reverse mortgage options, call Angella 866-949-7030, e-mail me at aconrard@gmail.com or log onto www.reverse-your-mortgage.com to learn more.

Consumers want to be prudent and compare reverse mortgage options. Even with internet access, it is difficult to know what all your options are. You can go down to your local bank and ask about reverse mortgages; unfortunately a bank employee is limited to the products offered by their employer if they offer them at all. An independent reverse mortgage broker/originator will have access to more programs and more lenders. An originator of integrity will focus on your needs and desires not the loan program.

Often when I receive phone calls from potential clients, some of the first questions I am asked are what are the interest rates and how much does a reverse mortgage cost. While these are very important questions, a good reverse mortgage originator will validate that this is important information to attain, however, it is more important to first attain some primary information about who you are, why are you interested in a reverse mortgage, what are your goals or what do you want a reverse mortgage do for you. What are your financial and emotional needs for a reverse mortgage? Emotional needs? Yes, emotional needs.

A loan originator needs to know an approximate value of your home, your age & your spouses' age, and your homes address.

Questions they should be asking are:

•·        Is your home in good condition?

•·        Will your home need any thing, a new furnace, a roof, and windows?

•·        Do you need a lump sum? If so, how much and for what purpose? Do you have medical or credit     card bills? Are you helping a son or daughter buy a home?

•·        Are you looking for monthly cash flow? How much do you need?

•·        How much per month? For how long? Is this loan going to be used to help you maintain or improve your lifestyle?

•·        Is any equity protection important to you?

•·        Does it matter how quickly your equity decreases? Reverse mortgages are a negative amortization loan. They are cash flow tools. The answer can be different for someone who is in their 60's in comparison to someone who is in their 80's.

•·        Is it important that you leave any leftover equity to your family or heirs?

•·        Are interest rates important to you?

•·        Do you need an emergency fund?

•·        Is there a possibility that you or your spouse might need money in the future for care?

This might seem like a lot of personal information but any good reverse mortgage originator will get a full picture of who you are, what your needs are, what is your financial philosophy, comfort level and your goals before they quote you specifics on reverse mortgage programs.

Here are some examples on how a conscientious reverse mortgage originator will customize their search for you:

•1.    Mr. & Mrs. Smith are in their mid 70's, have a home valued at $600,000, need a new car, like the security of a government insured loan and want $1200/month to travel and supplement their income. They plan to sell their home if one of them passes before the other. I recommended a FHA monthly adjusting reverse mortgage to maximize cash flow and meet their attraction to a government insured loan.

•2.    Mrs. Jones is in her 80's and wanted $40k to fix up her house to sell. Her home is paid for. Value $250k. We ordered her appraisal. The appraiser reported the home had foundation issues and would be very costly to repair. I recommended the client not do a reverse mortgage as it would be difficult to recuperate any repairs she made to this home. I recommend she sell it as is.

•3.    Mr. and Mrs. Peterson own a home valued at $800k. They are in their late 60's and owe a substantial amount on their present mortgage. Their goal is to eliminate their house payment. They plan to stay in their home for the duration of their retirement. I recommend they consider a jumbo loan at a fixed rate; this program will give maximum proceeds and minimum costs.

•4.    Mr. Anderson is in his mid 70's needs a new car and wants money to do some cosmetic work on his home. He estimates it will cost around $50k. His home is valued around $450k. He indicated he may need more money in the future. I recommend we look at the FHA reverse mortgages available.

As you perform your research on reverse mortgages make sure your originator knows your goals as well as they know their reverse mortgage programs, don't be shy about asking for references. Ask them if they specialize in reverse mortgages. Ask why they are recommending a particular reverse mortgage program. Why do they think that program will fit your needs over another? A good originator will be forthright with information, responsible and prompt in their follow up and won't be shy about shopping for the best program possible to fit your needs.

If you or someone you care about have a question about reverse mortgages, call Angella 866-949-7030, e-mail aconrard@gmail.com or log onto www.reverse-your-mortgage.com