Home equity is often considered one of the biggest assets retirees have, but many people are not taking advantage of this critical source of wealth hiding in plain sight under their roofs. For some retirees, a reverse mortgage may be worth considering in retirement, according to a recent TIME Magazine article.
The topic of reverse mortgages and their use in retirement planning recently found its way into the latest issue of TIME dated February 15, 2016. The article, written by Dan Kadlec, discusses how reverse mortgages, which were once scorned for high costs and risky full-draw loans, are now getting another look from financial planners.
“Experts now argue that this type of loan can be safe and even wise—as well as a key source of income that homeowners short on savings and planning to stay put should set up the minute they become eligible at age 62,” Kadlec writes.
For many retirees who own their homes mortgage-free, reverse mortgages could be a viable solution to helping them fund their longevity.
About 36% of owner-occupied homes are mortgage-free, and for homeowners age 65 and older, this share jumps to 65%, according to U.S. Census Bureau data referenced by Kadlec, who also notes that even amid a so-called “retirement-income crisis,” $12 trillion in home equity is lying on the table, to be used for either peace of mind or to preserve a legacy.
“This is the asset hiding under your nose,” said Shelley Giordano, chair of the Funding Longevity Task Force, a group of financial advisors who have been focused on leveraging housing wealth in retirement, in the TIME article.
While reforms in recent years such as the elimination of full-draw lump sum loans, Financial Assessment and non-borrowing spouse protections have made reverse mortgages stronger products, TIME notes that the biggest breakthrough has been financial planning research that shows the benefits of loan utilization early in retirement.
That is one reason Kyle Winkfield, a financial planner in Washington, D.C., recommends homeowners who have a potential savings shortfall obtain a reverse mortgage line of credit earlier rather than later.
“It’s better to have this and not need it than to one day need it and not have it available,” Winkfield told TIME.
By setting up a reverse mortgage line of credit, and not using it until other savings are depleted can produce stronger results nor homeowners than those who wait until other retirement funds are dry, the article suggests.
“Tapping the equity line only when stocks are down, giving your portfolio a chance to recover, has similar benefits,” Kadlec writes. “The next time a silver-haired star urges you consider a reverse mortgage, it may be a sound suggestion.”
Written by Jason Oliva
For further information, contact George Lagarde at GLagarde@FinanceOfAmerica.com
What seniors should know about selling their homes
Ok so you and your family have finally made the decision to sell your home and move on, now what? Are you aware of all the options available to you? Will you consider moving in with an adult son or daughter who can help you with your needs as you grow older? Or perhaps you are considering moving to a senior supportive environment.
Many seniors would prefer to continue living in their own home, aging in place. Sometimes circumstances work against those preferences. Whatever the reason, there may come a time when parents, along with their adult children consider selling and moving on.
Unique issues and complex decisions
Selling a senior's home really is different and can be much more complicated. You will most likely be dealing with several unique issues and complex decisions during the process. Though seniors usually make the decision to sell, it is not uncommon for their adult children to be involved in the process.
See your house as an investment
Once the decision to sell has been made you need to start looking at the home as an investment. That involves selling the home for the most money, in the shortest time and with the least amount of inconvenience.
For most people a home represents the largest part of their net worth so getting the maximum price for the home is of utmost importance. Many seniors will be living on a fixed income; therefore the equity in their home becomes an integral part of their overall financial plan.
Put together an action plan to effectively market your property for top dollar.
Consult with a Seniors Real Estate Specialist
The issues facing senior citizens when selling their home are much different than for younger people, and most real estate agents have little idea how to resolve them. A mistake can be very costly, and for that reason any senior looking to sell their home should consult with a specialist. This professional should maintain a network of other senior-focused professionals who can assist in tax counseling, financial and estate planning, and other aspects of the sale and move.
Create a marketing plan
Once you have selected an agent that you feel confident about and are comfortable working with, it is now time to put together a marketing plan for the home.
Comparative Market Analysis
The first step is to have your agent prepare a CMA (comparative market analysis). This is a key piece of information as it compares your property—the subject property—with other homes in the area known as the comparables.
The CMA will compare your home against other homes that have sold in the last 90 days, are currently listed for sale or that did not sell in the last 90 days where the listing has expired and terminated.
Determine your listing price
Once the agent evaluates the information and makes the necessary adjustments to make the subject property as close to the comparables as possible, it is time to determine a listing price for the property.
Under pricing and over pricing
Many seniors, once they decide to make the move, often make the mistake of "under pricing" the property in order to secure a fast sale. This is not recommended and should be discouraged.
In order to sell the property for maximum dollar, caution must also be taken not to "over price" the property either. This is also a very dangerous strategy as it will assist in selling other properties in the area.
Pricing and Buyers
Pricing a property within the recommended range will bring in around 75-80 percent of prospective buyers. Even in a hot market pricing the property too far above market value will limit showings as only 5-10 percent of all eligible home buyers will see the home. Listing the home below market value will guaranty that 100% of potential home buyers will see the home but again this is a very dangerous area. The public will perceive this to be a bargain which could result in the seller getting far less than what the home is worth. Selecting a proper listing price is one of the most important factors when selling a home.
Seller's market or buyer's market?
During the listing of your home your agent should have discussed the current market conditions presently being experienced in your area. You should have a general understanding of how the local real estate market works, along with the forces and influences affecting your local real estate market at the present time.
Questions like whether it is a seller's or buyer's market should be answered. Perhaps the market is more balanced. If so, your agent should be able to tell you what effect this will have on the price and the average number of days it takes to sell a home like yours.
Listing on MLS
Another important factor when marketing the home is to list the property on MLS. The multiple listing service is a very important tool to help gain maximum exposure because it markets the property to all the other realtors who are members of the real estate board. It also gives the public access through the public MLS site that is supported by the real estate board and its members.
How to buy a house with a reverse mortgage
WASHINGTON – Nov. 7, 2011 – Do you know that if you are 62 years or older you may be able to buy a house or a condominium using a reverse mortgage? A reverse mortgage allows you to get money from a lender, but you do not have to pay it back (or make any monthly payments) until you sell or die.
How does it work? Let's assume you just sold your existing house and want to downsize to a smaller house or a condominium unit. You have $300,000 cash from the sale, and since you qualified for the up-to-$500,000 exclusion of gain, you will not have to pay any capital gains tax.
Your new property will cost approximately $300,000. You are retired and do not have a current, steady stream of income other than your modest retirement fund. You might be able to get a traditional mortgage but you will probably have to come up with a large deposit – maybe as high as 30 percent of the sale price.
This will significantly drain your finances and affect your current lifestyle. What about a reverse mortgage?
You could consider the FHA Home Equity Conversion Mortgage, which is the only federally insured reverse mortgage available.
To qualify, you must be at least 62; if you are buying with a spouse, both of you must meet the age requirement. The house you buy must be your principal residence and you must certify that you will live in the house within 60 days of obtaining the loan. Although single-family residences and properties with two to four units are eligible, cooperative housing is not. And if you are considering buying a condominium unit, make sure that the entire condominium association is FHA-certified.
You (and your spouse, if applicable) will be required to meet with an approved credit counselor because there are significant legal and financial implications to such a mortgage. If you plan to leave your house to your children, for example, a reverse mortgage may leave little or no equity should you live a long time. Additionally, there are costs involved in such a transaction, although in many instances, they can be included in the amount of the loan. A counseling certificate must be submitted to the lender before closing.
You must use your own cash for the difference between the amount of the reverse mortgage and the sale price. Sellers can pay such costs as transfer tax, real estate commission, title search and other fees typically paid by a seller, but seller credits or set-asides for repairs will not be permitted.
How much will you be able to get by way of the reverse mortgage? That depends on a number of factors, primarily the age of the youngest borrower, the interest rate, the ZIP code and whichever is lower – the actual sales price or the appraisal. Why ZIP code? Because there is a maximum claim amount, which is linked to the FHA loan limit on single-family dwellings. That limit varies by state, county and even city. For example, in the District of Columbia, Arlington, Alexandria, Bethesda and Gaithersburg, the current limit is $625,500. In other areas, it ranges from $271,050 to $494,500.
Several online sites have very helpful loan calculators that will assist you in determining how much money you will need. I took our example, and plugged in a D.C. ZIP code and the ages of husband and wife in the mid-70s. According to the calculator, I was able to get a reverse loan of $198,187 for a standard, fixed-rate reverse mortgage. That means I will need a little over $100,000 to buy that $300,000 property.
Is a reverse more favorable than a regular mortgage? Yes, for two reasons: First, I will still have almost $200,000 left from the earlier sales proceeds. But more important, I will not have to make any mortgage payments. The bulk of a regular mortgage payment is the portion that goes to interest. For example, if I were to get a 30-year fixed loan for $200,000 at 4.25 per cent, my monthly payment would be $975 – money I am saving with the new reverse loan.
When does the loan come due? When you move out or die. At that time, you or your estate will either have to pay off the then outstanding mortgage – which will be much higher than the original loan, since interest will be added yearly – or sell the property. But one thing is clear: Neither you nor your heirs will ever have to pay more than the value of the house; that's what FHA guarantees, since it has to pay any excess.
Need more information: George Lagarde: GeorgeLagarde@OpenMtg.com RveverseMortgageLV.com
Using your nest to help with your nest egg is becoming a more common way to round out a financial plan during retirement.
Even after the bursting of the housing bubble, the biggest financial asset many retirees have is their home. But because that money is tied up in the equity of the house, it's an investment that has been difficult to count on as a source of income.
Reverse mortgages have long been an option. However, until recently, they were the Wild West of retirement planning. High upfront costs, poor disclosure and dodgy sales pitches made them an option that many advisers avoided.
Now, with the introduction of reverse mortgages backed by the Federal Housing Administration in late 2010, more financial planners are adding them to their tool kit.
Primarily, they're using them as a way to provide a steady stream of tax-free income that can last the rest of a retiree's life. They can also be used as a way to provide a cushion against a big, but temporary, drop in the markets.
"Between Social Security and a reverse mortgage, for some people there might be enough money to cover their needs-based expenses," says Mark Cortazzo, senior partner at Macro Consulting Group, a financial advisory firm in Parsippany, N.J. "Then you can use a portfolio, or maybe a part-time job, to cover the 'wants.' "
While any financial-planning decision should be thought through, a reverse mortgage literally involves the roof over your head. Take the time to understand the implications of a reverse mortgage, the costs and the different options. "It's a tool...but it's something that people need to be careful with," says Mr. Cortazzo.
Borrowers need to be sure they will have enough money in future years to pay real-estate taxes and homeowners insurance, or otherwise face possible eviction. Married couples should be sure both names are on the mortgage to avoid a situation where after the death of the sole spouse named on the loan, the surviving spouse has to pay off the loan. And retirees should be wary of brokers pushing higher-fee reverse mortgages.
A reverse mortgage is essentially a loan that allows the owner of a house or condo to convert some of the equity in the property into cash. Such mortgages differ from a traditional loan in that the money doesn't need to be repaid until the home is sold or no longer used as a principal residence.
Another major difference is that there are no credit and income requirements. These mortgages can be set up to pay out all at once in a lump sum, on a monthly basis or as a line of credit. (Details can be found at the website of the Department of Housing and Urban Development. Go to hud.gov and search for "reverse mortgage.")
One of the quirks of reverse mortgages that makes them appealing for a financial plan is that when set up on a monthly basis, over a period of many years a homeowner could receive more money in payouts than the house is worth at the time of the loan.
Roberto Nascimento, director of reverse mortgages at Arlington Financial in Yonkers, N.Y., takes the example of a 66-year-old with a house valued at $340,000. After subtracting the closing costs on a low-cost, FHA-backed floating-rate reverse mortgage known as a "Saver," that retiree could get a loan for about $173,000, which translates into a monthly check of $1,006 for the rest of his or her life.
By age 86, the payouts would have totaled more than $240,000; after another decade, the total would be $360,000. A "standard" reverse mortgage, with higher closing costs, would pay out $414,000 over 30 years.
Financial planner Harold Evensky, in Coral Gables, Fla., is taking a different tack with reverse mortgages. He has long recommended retirees keep on hand enough cash to meet two years of expenses, thereby avoiding having to sell investments at depressed prices during a bear market to pay the bills.
Mr. Evensky says that with a reverse-mortgage line of credit known as an HECM Saver, that cash bucket can be reduced to just six months. When things get ugly in the market, the retiree taps the equity line. When markets improve, he or she can sell investments and repay the loan.
The credit line is permanent, and the retiree won't have to start paying back the loan right away. In addition, the amount available to borrow will increase over time.
Mr. Cortazzo, meanwhile, points to an example where a reverse mortgage is being used to help keep the mother of one of his clients in her house and pay for the in-home care she needs. Not only does the reverse mortgage keep her in her house, her sons won't have to incur tax penalties by dipping into their retirement accounts to help pay for her care.
They just give up the possible future benefit of proceeds from selling the house. "That's the sweet spot," says Mr. Cortazzo.
Grandparents Bearing Checkbooks
By VERONICA DAGHER
Earlier this year, Frank Fertelmes gave his car to his 21-year-old grandson to get back-and-forth to college.
Mr. Fertelmes's daughter could no longer drive her son to school each day with her family's one car, as she had just started a new job after being unemployed for over a year. Mr. Fertelmes' son-in-law couldn't help out either, as he is still on medical leave after a serious car accident.
The 81-year-old Stratford, Conn., native also pays for the occasional car repair and maintenance. And he likes to slip his grandson, who goes to school full time and takes any part-time work he can get mowing lawns and doing other handiwork, the occasional $20 for lunch or gas money.
"The downturn put a strain on his parents, and he needs my help," Mr. Fertelmes says.
Grandparents, like Mr. Fertelmes, are increasingly playing a bigger financial role in the lives of their grandchildren.
The economic strain on their children and grandchildren, due in part to higher unemployment, is prompting more grandparents to pitch in and pay for everything from toys to insurance to college tuition.
Yet some grandparents are making financial mistakes that could put their own financial future in jeopardy. Promising too much to grandchildren, not saving enough for their own possible health-care needs and paying off their grandchildren's loans are some of the mistakes well-meaning grandparents are making, say financial advisers.
"Grandparents can sometimes give too much support," says Oliver Pursche, a Suffern, N.Y., financial adviser.
Grandparents today are younger and have more financial resources than ever before. The majority of grandparents are working age baby boomers between the ages of 45 and 64, according to a recent study by the MetLife Mature Market Institute. In the past decade, the inflation-adjusted income for households age 55 and older has risen to 34% of the nation's total, up from 28%. Yet during that same period, income of households ages 25 to 44 fell to 36% of the total from 43%, according to MetLife. In turn, some grandparents feel compelled to help their progeny whose income has fallen behind.
However, Mr. Pursche has seen several grandparents make the basic mistake of lending support before they "do the math" and figure out what they can actually afford to give.
Lazetta Rainey Braxton says grandparents can make the mistake of not planning to cover the expenses of catastrophic events, such as significant medical and long-term care costs. The Chicago-based certified financial planner says while it may be difficult for some grandparents, especially those who are young and healthy now, to throttle back support for their grandchildren, they may need to do so to ensure they have enough money saved for possible health-care expenses later in life.
"One of the biggest gifts a grandparent can give is being able to afford his or her own care," she says.
Among the biggest mistakes William Martin sees grandparents make is helping pay off their grandchildren's debt. The State College, Pa., certified financial planner says this can be dangerous because it not only shrinks the grandparents' balance sheet but it can also enable the grandchildren to make poor debt decisions down the road and ultimately prevent them from becoming "financially healthy" adults.
While helping a grandchild with a school loan, within reason, may be appropriate, he says, grandparents should think twice before helping pay off junior's credit-card bill, for example. "The key is to [reward] good choices, not bad ones," says Mr. Martin.
Grandparents who want to help the next generation, but who may not be able to permanently part with their cash, may consider an informal loan agreement with their grandchild, says Ted Halpern, a Rockville, Md., financial adviser. Grandparents can either put a basic loan agreement in writing or do it simply with a handshake.
One of his clients who lent her grandchild money for a home down payment created a written agreement that included the loan amount, interest rate and monthly payment. The interest rate on the loan was less then what the grandchild would have paid at a bank, and the loan came with an "unwritten" understanding that the repayment term could be extended if needed.
For grandparents who can't give money, Michael Lynch, a Shelton, Conn.-based certified financial planner, recommends they give support in other ways such as volunteering with their grandchild or encouraging them to pursue an education.
"Sharing your values is an important gift," says Mr. Lynch.
Reverse Mortgage Industry: We Have a Financial Planner Problem
After speaking with several financial planners for a recent article on RMD, it became clear the industry faces a serious problem... Financial planners have little to no knowledge about reverse mortgages.
When asked if they had recommended—or would ever recommend—one of these loans to their clients, the first few planners responded negatively, but were largely unable to explain why they gave the response they did.
This raised an interesting question: If a financial planner's job is to advise people on how to plan their finances for the future, how can they give someone good advice if they're not fully versed on of all the options out there?
Their lack of knowledge could pose a disservice to seniors who may need the product, but are not given the choice.
One financial planner mentioned a limited understanding of the product, focusing primarily on what he "knows" about the "industry's abuse against seniors."
This advisor, along with another, said cost analyses they've run on reverse mortgages never break even, and their situation models are always in favor of either selling the home and using the proceeds toward rent, or taking out a home equity loan/line of credit.
While the planners I spoke with up to this point seemed entrenched in their negative preconceptions, one conversation pointed to the possibility of turning the tide.
This particular financial advisor had some knowledge of reverse mortgages after looking into the product for her elderly aunt, and was willing to learn more. Through both email and phone correspondence, the questions she asked sparked a dialogue about the loans.
I ended up sending an email to the advisor, asking for her thoughts on the HECM Saver program, which has much lower upfront costs due to a lower insurance premium. She called me about an hour later, after looking into the Saver, and said she had previously been completely unaware of the product.
After doing some research, though, this financial planner acknowledged the "plus side" to the HECM Saver, i.e. the lower insurance premium. She said she would "definitely" look at the program if she were considering a reverse mortgage.
While she couldn't be considered reverse mortgage's biggest advocate by any stretch of the imagination, progress was made in educating at least one financial advisor.... all with one email about the HECM Saver.
Whether the HECM Saver is the key to reaching this group of individuals isn't clear, but there is certainly a lack of understanding about the role reverse mortgages could play in the future of retirement planning.
It's easy to point the finger and blame those who choose not to learn about the program, but maybe the industry needs to turn that finger around and ask, when was the last time I reached out to a financial planner and let them know about the Saver—or reverse mortgages in general?
October 1, 2013 Please not the FHA has eliminated the HECM SAVER Program as of today. The only two programs available now are the Adjustable and the Fixed rate programs. And the closing costs have come down considerably. Need more information, contact George Lagarde at GeorgeLagarde@OpenMtg.com and the web site at: ReverseMortgageLV.com
When a Change in Health Prompts a Change in Your Will
An estimated 50% of us have a will or trust! This is not good news!
Most people have not yet comprehended (or accepted) that dying without a will is a very costly mistake that will negatively impact all you leave behind. It's not just about the hassles and frustrations your heirs will go through potentially for years, but the expenses involved. Ultimately, the state you live in will make decisions regarding your estate that will not distribute it the way you would have chosen. In a nutshell, get it done now and leave a legacy of respect, instead of resentment.
For those who do have a will, it is important to consider any changes in mental and physical health, as these could greatly impact the outcome of someone's wishes. For example, let's say mom's healthcare power of attorney states that dad makes all decisions for mom in the event she is incapacitated, vegetative state, etc.
Suddenly dad is exhibiting odd behavior and is diagnosed with Alzheimer's, which is progressing rapidly. Can he now make sound decisions for mom? Or, mom may not think about these details and this is the time for the children to talk with her about it.
So many Boomer children don't know how to talk with their parents about these delicate issues, so permit me to offer some very sound advice. It has to be done; it has to be discussed, as painful as it is. If left "under the carpet," no answers will be available to you should they become infirm or die. Get the answers now, and do so with love and compassion.
Here's one example: "Mom, we were thinking about yours and dad's situation. Now that dad is showing a decline in health, new decisions have to be made and documented so your wishes are fulfilled the way you would like them to be. Dad is no longer capable of understanding complex issues, and you will need to choose a new healthcare power of attorney, so we can ensure the correct decisions will be made. Can you please give this some thought? Can we make an appointment with your attorney to have this changed soon?
This one example really gets you thinking. Anytime there is a significant change in your life or a parent's life, consider discussing with an elder law or estate planning attorney. Being proactive isn't always easy or pleasant, but it can head off gut-wrenching issues that will occur at some point, especially if you have elderly loved ones. Making sound decisions in the midst of crisis is not the optimal time to think clearly.
Lead with love, and start communicating while you can!
© 2013 Julie Hall
Julie Hall, The Estate Lady®, is the foremost national expert on personal property in estates, including liquidating, advising, and appraising.http://www.TheEstateLady.com She is also the Director of American Society of Estate Liquidators®, the national educational and resource organization for estate liquidation. http://www.aselonline.com
Pass Equity Before You Die
The following article was written specifically for Professionals who deal with
Seniors in our communities. Please read this article, and if you feel you can make
a difference with your Senior clientele, call me for further information about the
Reverse Mortgage product from the FHA. 702-845-4632
PASS ON EQUITY BEFORE YOU DIE - Perspective For Reverse Mortgage Customers
Written by Harlan J. Accola
27 January 2010
It is traditional to pass on our worldly goods AFTER we die. In fact it seems to be almost a
rule amongst the seniors that I talk to that they must hang on to everything until the will or
the trust disburses after they have left the scene! Sometimes this is absolutely necessary
because their needs are uncertain and they are not sure if they have enough money to
make sure they don't run out for their needs before they pass away. But, what this article
addresses is the folks that know they have more than enough even if they live to 100 and
they will never run out of money. They strongly believe they want to pass on their home to
their children "free and clear".
Those folks don't understand (and it is up to us as lenders to educate them) that the goal is
really not to pass on the house - but the equity IN the house. Very few children move into
their parents' house when their parents are gone. It is almost always sold and the proceeds
are divided. They don't leave the cemetery, pack up Mom and Dad's stuff and prepare to
Most of the time, they call the realtor and put up a "for sale" sign. If that is the most likely
scenario, why is it so important to pass on the house free and clear? The truth is that the
children really could put the equity to better use in their 40's and 50's than when they get
to retirement age themselves. If parents live into their 80's and 90's, which is the common
life expectancy, then, their children are usually above the 60's and looking at retirement
themselves. When bills are high and the grandkids are going to college, there is a far
bigger need for the inheritance when they are younger. An inheritance is always
appreciated, but likely needed more at a younger age.
Many folks over 62 will tell us that they don't NEED a reverse mortgage and that is certainly
true. They have lots of other assets, retirement plans, pensions etc. Those are the folks
that I talk to about passing on the equity in their home early. If they know they will never
need part, or all of that equity, then they should think about passing it on to their children
or charity that is already planned in their will. Time value of money clearly dictates that the
money is worth more today than it will be in 2042. Ask any investment planner when is the
best time to invest money and they will tell you when you are 20 as compared to starting
when you are 40. If the grandkids need to go to college, helping today is a great investment in their future.
There is also the "bird in the hand" factor. Because of the uncertainties of our economy and
our health costs, we have no guarantees where the equity in our home is going to go. If
there is a real estate crash like back in the 30's, or we have to go to a nursing home, our
equity could be diminished or completely gone by the time we pass away. Today, we know
exactly what we can get out of a reverse mortgage and how much we can pass on.
Regardless of what happens in the future, that money has went to where we planned.
The most important factor is how I would like to conclude this article. Perhaps you have
seen the movie or read the book, The Ultimate Gift by James Stovall. If you have not, go
get one today, or several, and pass them on to your clients and friends. I won't spoil the
story line, but the most important lesson is that money is not the most important thing that
we leave behind. It is our values and our wisdom. We have all seen or heard stories about
heirs wasting money in months that took their parents a lifetime to save. It is important for
your clients to realize that if they give away money while they are alive, they can do it
coupled with their wisdom and advice. Give me $50,000 with 70 years of life experience
and I will likely do better than if the attorney calls and tells me to pick up a check at his
office that my parents left for me. Seniors really don't realize how much knowledge and
wisdom can be passed on to their children if they give it with their money while they are still
alive. It is up to us to show them what a great opportunity this is.
Harlan J. Accola
Certified Senior Advisor, Reverse Mortgage Planner, Registered Financial Consultant
ENVOY Mortgage of Wisconsin, Marshfield, WI
Contact Info: George Lagarde Telephone: 702-845-4632
Fixing up seniors' homes to help them age in place
Monday, July 8, 2013
Alberta Hough struggles to feed herself a snack, her arms shaking badly from Parkinson's disease. Days earlier, the 84-year-old fell while eating, sliding off her kitchen chair.
The rest of Hough's day isn't much easier to navigate. She wobbles into a bathtub with no grab bar. Her feet catch on damaged floor tiles. Part of the banister she needs to steady herself on the stairs has pulled out of the wall. At the back door, a rickety wooden ramp no longer supports the scooter that helps her get around.
The environment in which you live can be as disabling as a disease, and too often, older Americans wind up in a nursing home not because they're super-sick but because they can't get through their days safely at home.
Now a major research project will bring handymen, occupational therapists and nurses into the homes of 800 low-income seniors in Baltimore to test if some inexpensive fix-ups and strategies for daily living can keep them independent longer, and save millions in taxpayer dollars spent on nursing home care.
"Very small changes can make a big difference," said Sarah Szanton, a Johns Hopkins University associate nursing professor who leads the project. "We're not saying, 'What's your blood pressure?' We're focusing on function: What do they want to do?"
Losing independence is a leading fear as people age. But a recent poll shows that too few comprehend the changes in lifestyle needed to offset the chronic illnesses and gradual slowdown that hit just about everyone in the 70s, 80s and beyond.
Asked about their choice of living situation when they're older, Americans 40 and over say their top priorities are a one-level home with no stairs, that's close to their children and medical care, according to the poll by the AP-NORC Center for Public Affairs Research.
Chances are, that won't be enough.
For Hough, No. 1 is feeding herself without everything tumbling off the fork.
"I'm shaking all the time," she quietly told Hopkins occupational therapist Allyson Evelyn-Gustave.
Hough's other priority is not falling, and stairs are only one of her home's hazards.
To Hopkins' Szanton, bridging the gap between what older adults are able to do and what their homes allow them to do is key to maintaining independence.
The Capable study aims to prove how. During 10 home visits over four months, the Hopkins team is tailoring interventions _ including about $1,100 in home repairs or modifications provided for free _ to help low-income seniors who are having trouble caring for themselves.
Drills buzzed in Hough's house as carpenters installed a new banister and added grab bars and a raised toilet seat in the bathroom. They replaced patches of flooring to prevent trips and prepared to tackle the ramp.
As for eating, Evelyn-Gustave recommended a little-known tool: utensils and cups that are specially weighted to counter Hough's tremors.
"It'll be easier for you to hold," she promised.
The set of utensils costs only about $20, one of the affordable tips the study is generating. Hough's daughter had thought the only solution was an aide to feed her mother, which the older woman hates.
"I always said I wouldn't let my mom go to a nursing home," said Gloria J. Hawks, 66, who is determined to care for her mother in the house the two share.
The Capable project _ it stands for Community Aging in Place, Advancing Better Living for Elders _ is being closely watched by Medicaid officials in other states as a way to coordinate care and improve the functional problems that lead to pricey, and sometimes preventable nursing home admissions. Today, it's difficult for Medicaid patients to get these services.
With more than $8 million in research money from the National Institutes of Health and the Centers for Medicare and Medicaid Services, the project goes beyond home repair for health. It starts with a full-scale assessment of each participant's needs.
In one home, a Hopkins nurse discovered that an 82-year-old woman was taking all of her 26 daily medications at once instead of staggered throughout the day, leaving her disoriented and sedentary until she became too weak to get out of bed without help.
First the nurse fixed the medication schedule. Then the occupational therapist taught the woman leg-strengthening exercises and installed $30 steel risers to make it easier for her to get in and out of bed. Add new banisters, and soon she was moving around on her own.
Whether it is the cost or emotional ties, many people grow old in the same home where they spent their younger, more agile years. An AARP survey in 2010 found nearly 90 percent of seniors wanted to remain in their current home for as long as possible.
Yet government figures show nearly 1 in 5 seniors living in the community have trouble with at least one activity of daily living, such as walking or bathing.
Those physical limitations become more difficult with doorways too narrow for walkers, toilets that are lower than chairs, and kitchen counters too tall to sit while cooking. Plus, nearly one-third of older adults experience a fall every year, and most who are injured fell inside the home, according to the Centers for Disease Control and Prevention.
"You don't think about that stuff," said Hattie Watties, who can't imagine leaving her Baltimore home of 36 years, that's near children and grandchildren. "You just do what you have to."
For Watties, 74, that meant climbing onto kitchen counters to reach too-high cabinets. Steep, dark stairs to the basement laundry only had a partial railing, so she threw clothes down and inched her way after them.
No more: Carpenter Tyrone White lowered Watties' cabinets to a comfortable reach, installed railings, and showed how an energy-saving compact fluorescent light bulb provided more light than a regular bulb in the dim stairway.
In homes where it's even darker, White sticks motion-sensing lights by each step to show where to aim your foot. They're less than $15 for a two-pack and run on batteries, so no rewiring is needed.
The work that perhaps has the biggest impact seen so far is a double railing for stairs lets people rest their weight on both sides.
The handymen, employed by the urban service corps Civic Works, also insist on installing carbon monoxide monitors, which have detected leaking gas stoves in some homes.
Do these solutions really save money?
The four-month intervention costs about $4,000 per participant, including the home modifications and specialists' salaries. The average cost for nursing home care in the U.S. is $6,700 a month, so even a modest delay could add up fast. Szanton will track participants long term and, based on results from an earlier pilot test of 40 high-risk seniors, hopes to delay nursing home entry by up to a year in this frail population.
For families, perhaps the bigger question is how long the solutions will last. Evelyn-Gustave teaches families to brainstorm options as new challenges crop up.
"We can't be there forever. They need the skill to carry on," she said.
Downsizing: How to Get Rid of Stuff You Don't Need
By Lynda Shrager
People downsize to make life simpler and get rid of their stuff. Most are baby boomers and seniors. Some have chosen to move to a new house that is easier to manage, some may have suffered a life change such as illness or death of a spouse, and some just want their present home to be safer and more accessible.
Today we'll talk about how to begin the de-cluttering process. Let's assume that the person who is the "downsize-ee" is going to be fairly overwhelmed at the job in front of her. It is best to break this daunting job into tiny little bite-sized pieces. Plan to work on one room at a time. Often, creating a time limit helps make it seem even more manageable. For example "we will focus on the big closet in the bedroom for 2 hours and then take a break. Our goal will be to get just the closet done today."
Start in a room that they use a lot because the noticeable results will create positive reinforcement and keep you all going. Another tactic for getting the ball rolling is an "initial blitz purge." Have your loved one think about what she would grab if told she had 20 minutes before the house was going to catch on fire. This exercise makes them realize that most of the "stuff" they are surrounded with is not as important as it originally seemed.
Throw away as much as you can. Include old makeup, food that has been in the pantry for too long (I actually had a canned vegetable expire), the grocery bag collection, broken toy parts, pens that don't write – you get the picture. Empty that junk drawer to make room for fresh future junk. You might have to make more than one pass through each room to be sure you catch it all.
Now that the unquestionable junk is out, let's get back to the room-by-room plan. How do they decide what to keep and what is clutter? Define what use the item has in their life. If they haven't used it in over a year they could probably live without it. Is it beautiful and do they love it, or are they just keeping it out of habit?
Clothing tip: If you haven't worn an item of clothing in over a year (I know, I too am hoping to lose that 10 pounds so it will fit), get rid of it. When they lose the weight treat them to something new and in style.
Categorize items into five groups:
Garage sale potential
Throw away pile
Notice I didn't list a "Maybe" pile. Let me share the OHIO rule with you as it is very helpful. This stands for Only Handle It Once, meaning no "hold till later." Each item goes into one of the above five categories only. The exception to this may be important papers because you don't want to waste a lot of time reading through everything now. One big box of paperwork for later is fine.
If your loved one has a lot of items in the same category you may want to help cull the amount down by asking which of their favorites they want to keep. I personally have a huge set of pots and pans, but I find I use the same large one for soup, the same frying pan and the same sauce pot over and over. This works with kitchen tools, towels, work tools, and anything we tend to collect in abundance of over the years. I had six sets of measuring spoons! (metal, plastic, heart shaped...they all seemed needed at the time). Pick out the favorites (which are not necessarily the newest ones) and the rest go into one of the five piles.
Use the following organizing tips to decrease your clutter:
Stay ahead of clutter. Sort and file mail daily.
Keep newspapers until the next edition arrives.
Clip and file articles you want and discard the magazine or paper it was in.
Donate clothes and other items to your favorite charity. You will feel better knowing others are benefiting from them. Theater groups are always looking for period clothing.
If items you are throwing out are too big and heavy to handle consider a professional junk remover such as 1-800-Got – Junk or College Hunks Hauling Junk.
The hardest part about downsizing is deciding how to handle "the treasures." Although I called my last post "Your Kids Don't Want Your Stuff " I think I should have called it "They Don't Want ALL Your Stuff." Next post will focus on the tricky business of deciding which kid gets what!
A "Standby" Reverse Mortgage
A Tool for Financial Planners
Here is an example of using a reverse mortgage line of credit as an investment vehicle. Calling it, "A Standby Reverse Mortgage", let's say a customer receives a Line of Credit from his reverse mortgage for $250,000: Using a Saver with minimal closing costs or Standard (with regular closing costs) Reverse Mortgage.
Let's assume the customer is comfortable in taking the $250,000 of cash held in reserves in his line of credit. It's cost has been approximately $8,600 to obtain the line of credit. And lets estimate the cost on any outstanding balances to maintain this line is 3.212% plus the 1.25% MIP imposed by FHA for a total cost of 4.462%. Again, only on outstanding balances if any.
Now, having this $250,000 line increasing each year so that on the second year it will grow by $11,415 to $262.054. The third year it increases by $11,935 to $273,989. The fourth year it increase by $12,479 to $286,468. And, the fifth year it increase by $13,046 to $299,514 etc.
Since the Reverse Mortgage carries no other costs other than the MIP and interest for the amount outstanding, and there are no monthly payments due to the bank, it becomes a fantastic tool for Financial Planners to use for their clients who have large price tag homes with a lot of equity and desire the opportunity to earn a larger amount on their money than normally paid by a Bank on a Certificate of Deposit or many other investment vehicles.
By using the "Standard" Reverse Mortgages, the closing costs will be greater by about $9,750, but the customer will see a credit line amount of $289,888, vs the $250,639 of the Saver Reverse Mortgage. A specific side by side comparison of both programs should be reviewed by the Financial Planner and the Customer before making a final decision as to which program to follow.
For a complete comparison packet of information on this unique FHA Reverse Mortgage program, please contact George Lagarde, NMLS 18581 at 702-845-4632 for a confidential appointment.
Lenders See Reverse Mortgage Purchase Helps In Case of Divorcing Borrowers
Life events often come into play, said Pamela Kirkpatrick, reverse mortgage adviser with, a leading Reverse Mortgage Lender, speaking on a panel during the National Reverse Mortgage Lenders Association annual convention in October. More often than not, a reverse mortgage can help when individuals—and couples—may least expect it.
One of those life events: divorce.
Solution for the Attorney and the couple: The Reverse Mortgage for Purchase Program.
"Selling in a down market can pose asset risk," Kirkpatrick says. "Both parties still need a place to live. This can be answered in several ways. For example, one person keeps the home and takes a traditional HECM, then takes some of that equity to do a HECM for Purchase on a new home for the moving spouse. This is a good way to solve the problem with the least amount of risk leveraging the asset."
The purchase also comes with some other considerations for those who have had success in making the deals happen. "It often goes unlooked at," Kirkpatrick says. "It really opens the door to have the opportunity to speak with attorneys, title companies and people participating in the process. Inevitably you will find people saying 'I wish I would have known.'"
The product, having launched in 2008, has averaged around 130 endorsements per month, according to the latest data from the Department of Housing and Urban Development. Many think it has performed under potential due to the lack of education on the part of Realtor's and other business people involved in the HECM for Purchase process.
"As the housing market continues to rebound, the HECM Purchase offers tremendous opportunities," said Sarah Hulbert, retail business development manager at 1st Reverse Mortgage. "It has been around for four years, but has been slow to catch on."
Aside from the obvious situation of a borrower looking to downsize or relocate in retirement out of want, originators report they have seen situations where the Home Equity Conversion Mortgage for Purchase works well; sometimes when they really need an alternative solution.
While it has been in the marketplace for several years, the reverse mortgage for Purchase has never quite taken off. However, some lenders say they are having success with the product as it meets the needs for certain outside-the-box borrowers. From an originating standpoint, turn times of less than average. an average turn time of 30 to 45 days—much faster than a conventional purchase.
Want to learn more on how to increase your sales volume through the use of the Reverse Mortgage for Purchase Program, just call George Lagarde at 702-845-4632, or email at: GeorgeLagarde@OpenMtg.com.