Seniors’ Home Equity Rockets in 2015

Interesting info looking back into this past year with positive ramifications for seniors considering a Reverse Mortgage.

 U.S. Seniors’ Home Equity Rockets to $5.76 Trillion

December 27th, 2015  | by Jason OlivaPublished in News

Seniors’ home equity hit a $147 billion growth spurt in the third quarter of 2015, continuing its steady climb for the eighteenth consecutive quarter, according to recent readings from the National Reverse Mortgage Lenders Association/RiskSpan Reverse Mortgage Market Index (RMMI).

In total, the $147 billion increase in the aggregate value of homes owned by seniors rocketed their share of home equity to $5.76 trillion, propelling the RMMI to a new all-time high in the third quarter of 2015 at 200.19. 

The multi-billion growth in senior home equity builds on its momentum from the previous quarter, where a $122.8 billion increase contributed to $4.08 trillion of home equity held by seniors, in turn powering the RMMI to a then-record-high of 195.29. 

Meanwhile, mortgage debt held by seniors rose slightly from $1.45 trillion to $1.46 trillion, though the gain barely made a dent in home equity levels, according to NRMLA/RiskSpan.
To estimate the value of aggregate senior home equity, the RMMI numbers for the third quarter are based on a revised methodology that includes data from the 2013 American Community Survey and the Federal Reserve’s Z.1 release. 

The recalibrated index uncovered something NRMLA/RiskSpan did not expect to see, which was that senior housing values outperformed the general population, said NRMLA President and CEO Peter Bell.

“In metro areas hard hit by the Great Recession, for example, senior home values were more resilient to declines,” Bell said in a written statement. “It’s great news for seniors who are considering tapping their housing wealth to support their retirement planning.”

The methodology changes and data source updates resulted in a 37% increase in the aggregate value of senior home equity.

Written by Jason Oliva

Welcome Claire Henderson to the VanDyk Team!

Claire joins us as Production Assistant this month and is eager to meet and work with all of our clients and referral partners. 

BIG CHANGES have arrived to the Reverse Mortgage Market!

The month of April brought not only changes in the weather for us here in Texas but also new requirements to the Reverse Mortgage process.  Over the last several years HUD (Housing and Urban Development) has been dealing with reductions in the mortgage insurance fund due to the great recession. Since the government requires this fund to stay at a certain level in order to protect lenders and programs changes were deemed necessary to keep the fund viable.

Defaults on taxes and insurance over the past several years were not isolated to the Reverse Mortgage programs. In fact most were related to regular mortgages but since taxes and insurance are the customers’ responsibility with Reverse Mortgages HUD is requiring more financial verification going forward. What this means to the customer is what HUD refers to as a "mini financial assessment". Basically a smaller version of what goes into a regular mortgage except that it won't include credit scores but will include verification of income and debts to make sure the customer will still be able to pay the taxes and insurance as well as normal maintenance and any HOA dues that may be required. 

The documentation that will be necessary will include a combination of bank statements, pay stubs, proof of assets if the customer owns other real estate, all similar to that required for a regular mortgage. These changes may make it more difficult for those seeking assistance from of reverse mortgage in a foreclosure or bankruptcy situations where in the past a reverse mortgage could have helped. Individuals with a history of late payments or severe defaults who can't show the ability to overcome that debt by utilizing a reverse mortgage will also find it more difficult getting approved with the new requirements.

On the other hand, those individuals who can show a history of paying the taxes and insurance on their property will not really see any difficulty with the HUD changes. For those individuals that may be struggling slightly due to reduced income and may need the assistance of a reverse mortgage HUD may set aside funds out of the reverse mortgage into a reserve fund that would be there to cover taxes and insurance over a calculated period of time based upon each individuals situation.

While some folks may find that a Reverse Mortgage is not the solution they had hoped for, the program remains extremely beneficial to many 62 and over homeowners who want to gain some financial freedom and utilize the major part of their assets which are tied up in the home.  For more information, contact me at 210-493-7332 or visit my website at www.texasreverse.net .

What is a “jumbo reverse mortgage?”

Jumbo lending isn’t just on the upswing for traditional U.S. home loans. It’s also being revived for seniors who want to borrow against the equity in their houses through reverse mortgages. VanDyk Mortgage is proud to introduce a powerful new jumbo reverse mortgage that allows you to maximize home equity: the HomeSafe reverse mortgage.  Now, individuals age 62 or older who either own or are looking to purchase a property that’s valued at $1.5 million or more can access more of their home equity for long-term retirement planning.

 

HomeSafe offers these unique advantages over a Home Equity Conversion Mortgage (HECM):

·        Loan amounts of up to $2.25 million—significantly higher than a HECM allows

·        No mortgage insurance premium

·        No initial disbursement limitation—they take the full amount at closing

·        Condominiums appraised at $500,000 or more do not require FHA approval

·        If they’re buying a house or condo, seller concessions and lender credits are allowed

HomeSafe offers a competitive fixed interest rate and a lump-sum draw. You can use the proceeds in a variety of ways—for example:

·        Pay off existing mortgage debt, to eliminate monthly mortgage payments* and improve cash flow

·        Buy a house or condo in an upscale area or active lifestyle community

·        Pay for home improvements

·        Cover medical or in-home care expenses

·        Refinance an existing reverse mortgage to access a larger pool of funds

For older Americans with expensive homes, staying in the house and getting a jumbo reverse mortgage may be a better option than selling investments. Selling assets that have increased in value may result in capital-gains taxes, while income drawn from a reverse mortgage is tax free.

 

To learn more about our HomeSafe jumbo reverse mortgage contact us today!!

Melinda Hipp – VanDyk Mortgage, NMLS#219085

210-493-7332 or mhipp@vandykmortgage.com

www.texasreverse.net

www.nmlsconsumeraccess.org

 

Big Give SA 2015

What is the Difference Between a Reverse Mortgage and a Home Equity Loan?

Generally a home equity loan, a second mortgage, or a home equity line of credit (HELOC) have strict requirements for income and creditworthiness. Also, with other traditional loans the homeowner must still make monthly payments to repay the loans. A reverse mortgage generally has no  credit score requirements and instead of making monthly mortgage payments, the homeowner receives cash from the lender. However there will be changes with the process for qualifying for a Reverse Mortgage in 2015 with the addition of a "Financial Assessment" (more about that in my next post).

With a reverse mortgage the amount that can be borrowed is determined by an FHA formula that considers age, the current interest rate, and the appraised value of the home. Typically, the more valuable the home,  the higher the loan amount will be, subject to lending limits.

To summarize the key differences, with traditional loans the homeowner is still required to make monthly payments, but with a reverse mortgage the loan is typically not due as long as the homeowner lives in the home as their primary residence and continues to meet all loan obligations. With a reverse mortgage no monthly mortgage payments are required, however the homeowner is still responsible for property taxes, insurance, and maintenance.