Category: Retirement Planning

Difference Between a HELOC and a Reverse Mortgage

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Financial Planning, Retirement Planning, Reverse Mortgage

Laurie Denker MacNaughton © 2025

What is the difference between a reverse mortgage and a home equity line of credit (HELOC)?

Traditional equity lines, of course, have a required monthly mortgage payment, and the more you borrow, the higher the month-end mortgage payment becomes. Also, most HELOCs have a 10- or a 15-year term, meaning the full balance is due at the end of the term. If the home falls in value during the life of the loan, the full balance is still due.

A reverse mortgage line of credit does not have a monthly repayment obligation. Rather, the mortgage is repaid on the back end, in reverse, when the last title holder permanently leaves the home. Most commonly, the heirs sell the home and the loan is repaid at the time of closing. However, the heirs can refinance or repay the loan and keep the home.

One of the most important things to note with a reverse mortgage is that if the home falls in value there is never a deficiency due. This means that if the loan is underwater at the time it’s sold, the home will repay what it can, and any shortfall will be covered by the FHA mortgage insurance.

A reverse mortgage line of credit can be a transformative retirement resource, and may provide one of the biggest retirement buckets in a homeowner’s portfolio.

If you’d like to see if a reverse mortgage may be a fit for you – or for someone you love – give me a call. I always love hearing from you!

Mortgage Rate Mythbusting: Destroying the most common misconceptions

by ReverseLady, posted in FHA HECM, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse for Purchase, Reverse Mortgage

Setting the record straight on mortgage rates and economic drivers

By Clayton Collins

Published by: HousingWire, August 1st, 2025

Bad takes about mortgage rates spread faster than wildfire—especially when they come from politicians or go viral on X. But when these narratives are misleading or flat-out wrong, they don’t just confuse consumers. They erode trust in our industry and inject unnecessary chaos into an already complex housing market.

It’s time to set the record straight on the most persistent myths about mortgage rates—some of which have been amplified by high-profile figures who should know better.

Myth #1: “One man controls all interest rates”

On July 31, Rep. Thomas Massie (R-KY) fired off this tweet: “It’s absurd that one man sets interest rates for a ‘free’ country. End the Fed.”

The tweet racked up 3.7 million views. It also fundamentally mischaracterizes how U.S. monetary policy actually works.

The reality: Interest rates are set by the Federal Open Market Committee (FOMC)—a 12-member voting body that includes seven governors appointed by the president and confirmed by the Senate, the New York Fed president and four rotating regional Fed presidents.

Jerome Powell may be the face of Fed policy, but he doesn’t set rates by decree. Policy moves are debated, voted on and shaped by extensive data analysis and institutional perspectives. The “one man” narrative isn’t just wrong—it’s dangerously simplistic.

Myth #2: “The Fed doesn’t control mortgage rates”

The reality: This one’s particularly insidious because it’s partially true, which makes it harder to debunk—but let’s agree that the statement by itself is filled with falsehoods. The Fed doesn’t directly set mortgage rates, yes, but its policies have massive indirect influence on mortgage pricing.

Most mortgage rates—especially the 30-year fixed—track closely with the 10-year Treasury yield. Fed actions like rate hikes, forward guidance and quantitative tightening directly impact investor expectations, bond yields and ultimately mortgage rates.

Fed Chair Powell made this crystal clear during a 2025 Senate hearing:

“Monetary policy works through interest-sensitive spending. There is no more interest-sensitive spending than buying a house and having a mortgage…. Our tighter policy is having an effect on economic activity in the housing sector.”

He added: “The Federal Reserve does not control housing supply, but its actions do have a massive effect on housing supply.”

Translation: The Fed isn’t pushing the button on your mortgage rate, but it’s absolutely adjusting the levers that move the market.

Myth #3: “Mortgage spreads don’t matter”

The reality: This isn’t a myth born from overt misinformation—it’s a myth born from omission. Most media coverage and political commentary stops at the 10-year Treasury or Fed Funds Rate. But mortgage rates are also shaped by the spread between the 10-year yield and the 30-year fixed rate.

This spread is driven by investor appetite, risk premiums and MBS pricing. Ignoring spreads leaves consumers with an incomplete picture.

As HousingWire Lead Analyst Logan Mohtashami puts it: “We’re starting to teach people mortgage spreads, and I’m really happy about that—because nobody knew what it was, but it’s so important.”

During periods of financial stress, spreads can widen, keeping rates elevated even if Treasury yields fall. The myth isn’t that spreads are fake—it’s that they’ve been left out of the conversation for too long.

Myth #4: “Higher federal debt means higher mortgage rates”

The reality: The federal debt has been increasing for decades, while mortgage rates have been declining over the same period. The recurring idea that bond vigilantes will punish the U.S. with higher mortgage rates due to federal debt has been debunked repeatedly.

In the 1990s, the federal debt was much lower, along with a lower debt-to-GDP ratio and smaller deficits, but mortgage rates during that decade were higher on average than from 2010-2025.

Mohtashami has pointed out that 65% to 75% of the variability in the 10-year yield and 30-year mortgage rates throughout an economic cycle is influenced by Federal Reserve policy, along with nominal growth and inflation expectations. The overall state of the U.S. economy also plays a crucial role in determining these rates.

Bottom line: We need smarter conversations

As misinformation and partial perspectives about mortgage rates swirl through the industry, professionals must double down on financial literacy. Mischaracterizing rate policy doesn’t just confuse consumers; it undermines confidence in the market and distracts from real economic issues. As I discussed with Sarah Wheeler on the recent HousingWire Daily podcast, consumer psychology is one of the leading factors in our current “stuck” housing market.

Mortgage professionals, economists and journalists all have a role in correcting the record. The path to affordability starts with understanding, and understanding begins with fact-based reporting—not viral outrage.

The housing market is complex enough without adding manufactured confusion to the mix. Let’s focus on what actually moves rates, not what gets retweets.

It’s a big down payment. But bigger than WHAT?

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse for Purchase, Reverse Mortgage

Laurie Denker MacNaughton © 2025

I know this is a bit weightier than usual—but this conversation was SO profound that it needs recounting.

Brenda and her husband were due to retire in late 2025, and they had just downsized into a beautiful new home that was perfect for aging in place.

Four weeks after moving in Brenda’s husband died, suddenly and unexpectedly. Six weeks after THAT Brenda had a massive stroke and spent weeks in the hospital and then in rehab. Now she is deeply in debt and behind on her new “forward” mortgage.

Ironically, when I spoke to Brenda today she said she and her husband had asked their loan officer about using a Reverse for Purchase home loan to buy their new home.

The loan offer’s comment?

“You don’t want to do a Reverse for Purchase. The down payment is big.”

Big? Bigger than WHAT?

Bigger than NEVER falling behind on monthly mortgage payments? Bigger than being able to live in her own home—even after the loss of a spouse? Bigger than keeping her home even though she has had to retire ahead of schedule?

Brenda may have missed the opportunity to live in this home. I don’t know—but I do know her current plight was totally avoidable. I referred her to legal counsel in the hope something may work out.

Why am I recounting this really sad story?

Because it’s life. And because “life is what happens while you’re making other plans.”

A Reverse Mortgage is a home loan. But sometimes a Reverse Mortgage is not JUST a home loan. Sometimes it changes an aging homeowner’s entire future.

If you would like to discuss your plans—or the plans of one you love—give me a call. I always love hearing from you.

Blessings,

Laurie

Another loan officer said I don’t qualify for a home loan (or, Why you might qualify for Reverse Mortgage)

by ReverseLady, posted in Divorce, FHA HECM, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Property Tax, Retirement Planning, Reverse for Purchase, Reverse Mortgage

Laurie Denker MacNaughton © 2025

If you are a homeowner aged 62 or older and are trying to refinance the home you’re in or buy a new home, chances are you know the drill: your income is fixed, savings may be limited, and your debt may be relatively high compared to your income. In other words, you are having a hard time getting a home loan.

So why, then, with the exact same financial profile, might you qualify for a Reverse Mortgage after you were turned down by other lenders?

Here’s why:

First, there’s never a mandatory monthly mortgage payment. That right there makes a huge difference. Take just a second and think about what a difference it would make if you had NO required monthly mortgage payment. You are always allowed to make a payment if you choose to do so.

Second, to qualify you only need a monthly residual income of $529 for a single person, and $886 for a couple. “Residual income” means the amount of money you have left over at month’s end after we account for your property taxes, homeowner’s insurance, HOA dues or condo dues (if applicable), and the minimum amount due each month on your credit accounts.

Be certain to note that no matter what kind of home loan you have – or even if you have no home loan at all – property taxes and homeowner’s insurance are still a monthly expense. Many aging homeowners have some kind of property tax waiver, and a reverse mortgage does not impact eligibility.

Even though this loan is specifically designed for homeowners and homebuyers aged 62 and older, not everyone is going to qualify. However, millions of Americans have chosen to use a reverse mortgage to either refinance the home they’re in or to purchase their aging-in-place home due to the financial flexibility it may provide.

If you would like to talk about whether a reverse mortgage might be a fit for your retirement plans, give me a call – I always love hearing from you!

Laurie

Aging in America—By the Numbers

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse Mortgage

Laurie Denker MacNaughton © 2024

The population of older Americans is huge—and growing. By 2030 nearly a quarter of the population will be over 60, according to the U.S. Census Bureau.

In order to study trends and trajectories, experts who study aging use the term “cohort” when  looking at groups.

As a quick personal aside, through the years I have often pondered how oddly asymmetrical aging can be. In my role as a reverse mortgage loan officer, both aging homeowners and the adult children of aging parents frequently tell me that one spouse or parent is holding his or her own—or even thriving—while the other is deep in the throes of mental or physical incapacity. Consequently, looking at large groups of people will not reveal what someone’s personal aging journey may entail, but numbers do give a statistical picture of what is typical.

The pandemic profoundly impacted older adults in many ways, including financially. In the years following the pandemic older workers who had lost their job were much less likely to get rehired into their previous position. In the tight post-pandemic job market, “unretiring” became prevalent for those willing and able to take jobs traditionally held by teens, such as cashier, call center representative, barista, and receptionist. These lower-paying jobs mean over 14% of those over 60 live below the nationally-established poverty level, according to National Council on Aging.

The youngest cohort that is considered “older adult” comprises those in their 60s. Many in this age group are often working full-time and are still physically active. This means they travel, seek to acquire new skills, and start new business in much higher numbers than did previous generations. Technological proficiency is common, but so is divorce. A distressingly high number have done no end-of-life planning, 62% carry credit card debt, and 50% have no retirement savings (U.S. Census Bureau).

Those in their 70s make up the next cohort. Most people in this group have either retired or are actively making plans to retire. Serious health issues may start to surface, and 58% of women and 28% of men are widowed by the age of 75 (Census.gov). According to the IRS, by the age of 70½, 79.5% of Americans draw more than their Required Minimum Distribution from savings.

The final cohort comprises those aged 80 and older. 31% of this group still has mortgage debt, and 92% rely on their Social Security benefits for the majority of their income, according to National Council on Aging. More than 70% of in this cohort will eventually require in-home care, and the number of Americans who live to be 100 or older will quadruple over the next 3 decades (Pew Research Center).

So why all the numbers?

Here’s why…

Research put out by Morningstar Center for Retirement & Policy Studies in August 2024 states the following:

45% of American households will run short of money in retirement. The outlook for single women was even more bleak, with about 55% of them seen as at risk in retirement, compared with 41% of couples and 40% of single males.

The study goes on to state that two-thirds of Americans fear running out of money more than death, 58% worry about losing independence, and 52% fear being a burden on family.

And frankly? I’m not sure any of these numbers come as a surprise to most of us.

It’s here that a reverse mortgage may play a role in improving financial survivability in retirement.

A reverse mortgage won’t be a fit for everyone, and not everyone will qualify. But if you are—or an aging loved one in your life is— struggling financially, give me a call. Together let’s see whether a reverse mortgage might be part of the solution.

“We never expected to live this long”

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse Mortgage

Laurie Denker MacNaughton © 2023

Most of us get very judgy when it comes to money. I don’t know why.

Yesterday I had a closing with a very old, very dear couple, both of whom were groundbreaking professionals in their respective fields.

Both have pensions, both have Social Security—and both had significant savings.

But she is now 93 and he is 96, and their savings are long gone. Their guaranteed income is just not enough to meet their care needs.

At the closing table the husband said to me, “We don’t want our friends to know we’re doing a reverse mortgage—but we need money. We never expected to live this long.”

Yup, I hear you. When you were born, dear one, your life expectancy was more than three decades shorter.

A reverse mortgage is home equity mortgage. But it’s a mortgage that has no required monthly payment. Because it’s a loan, it must be repaid—but it’s repaid on the back end, in reverse, when the homeowners no longer reside in the home. Any remaining equity belongs to the heirs.

One last thing: a reverse mortgage won’t be a fit for everyone. But if an aging loved one in your life is struggling financially, give me a call. Together let’s see whether a reverse mortgage might be part of the solution.

Blessings to you and yours in this season.

Laurie

Reverse mortgage: an additional solution for resolving equitable distribution in Silver Divorce

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, Divorce, FHA HECM, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse for Purchase, Reverse Mortgage

Laurie MacNaughton © 2022

Equitable distribution can be among the most complex issues in any divorce. When the divorcing parties are aging adults, an additional layer of complexity may be involved.

Historically, there have been two solutions to equitable distribution: sell the marital home, or refinance the existing mortgage to clear the departing spouse from the note.

However, either solution may be suboptimal. If one party has impaired health, moving can be severely stressful. Additionally, homes currently for sale may be unsuitable if the individual parties are hoping to purchase. It also bears mentioning that because one party—or both parties —may experience a reduction in income following the divorce, obtaining a new purchase-money mortgage may not be within reach.

Similarly, refinancing a home can be difficult, or simply impossible, on one income.

Reverse mortgage overview

A reverse mortgage is a home equity loan. It differs from other home equity loans in that a reverse mortgage loan is not repaid until the last person on title permanently leaves the home. In other words, the homeowner can borrow some of their home’s equity without picking up a monthly mortgage payment.

Because this is a mortgage, it will eventually be repaid—but it is repaid on the back end, in reverse. Only the loan amount is repaid; all remaining equity goes to the heirs or estate.

Applicability to Silver Divorce scenarios

Spouse remaining in the marital home:

In cases where couples have been married many years, there may be equity enough in the home for proceeds from the reverse mortgage to pay the departing spouse’s portion of the marital share. At very least, reverse mortgage proceeds plus an additional cash payment to the departing spouse may make it possible for one partner to retain the property. This would be a Reverse Refinance scenario.

Relocating spouse:

The spouse relocating after divorce may face unanticipated challenges when looking to purchase. Common challenges include newly-reduced household income; unfavorable debt-to-income ratios; excessive credit utilization; and negative mortgage-payment history incurred during the marriage.

A strong option may be Reverse for Purchase. This purchase loan works in the following manner: the homebuyer provides a down payment, the size of which is determined by the homebuyer’s age. The loan provides the rest of the purchase price.

The general formula should sound familiar:

down payment + plus loan amount = purchase price of the home

However, unlike a “forward” mortgage, with Reverse for Purchase, there is never a required monthly mortgage payment—though the homeowner may make a payment at any time if s/he so wishes.

Not making payments is very different from saying the loan is never repaid. The loan is always repaid—it’s just not repaid on a monthly basis. Rather, the loan is repaid when the last person on title moves, sells, or dies. In other words, the loan – interest and principal—is repaid once the homeowner no longer needs the home.

Of course, a reverse mortgage will not work in every divorce situation. But in many divorces in which the divorcing parties are 62 or older, reverse mortgage may serve as an option for meeting the financial mandates of the Property Settlement Agreement and for meeting the housing needs of the relocating spouse.

Divorce is no one’s “Plan A.” But as the classic line goes, life is what happens while you’re making other plans.

If you have questions about how a reverse mortgage might help your client, give me a call. I always love hearing from you.

You’re not as pretty as you used to be

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse Mortgage

Laurie MacNaughton ©2022

My client sat down, looked at my business card, looked at me and said, “You’re not as pretty as you used to be.”

Yup. That happened.

I laughed and said, “You’re right – that’s an older picture. I need to get new cards.”

After his comment, for the millionth time I had to reflect on the weirdness of aging.

Because aging is weird. Aging is confusing. And, frankly, aging can be kind of scary. Add money concerns to the mix and aging can be…really scary.

Many clients tell me they’re concerned – or even outright scared – about money. This concern, of course, is why they’re exploring a reverse mortgage in the first place.

This said, it would be a misconception to paint all my clients with one broad brush. Truth is there are many reasons homeowners look into a reverse mortgage – but there are roughly three categories of enquirers.

The first is a group I call the “pre-need planners.” People realize their income, savings, and investments are likely not to be sufficient as they age, and they’re looking for a tax-free source of liquidity for future use.

The second reason is debt. Often this debt was driven by a health emergency, and uncovered expenses were paid with credit cards. Now the crisis is past, and they’re left struggling with high-interest payments.

The third reason is in-home healthcare. These costs can be breathtakingly high, and it’s not unusual to see couples paying $22,000 per month for care. $22,000. Per month. Many of these clients went into retirement with hundreds of thousands in savings, but have simply outlived their money.

Many past clients have called to say their reverse mortgage has been a “miracle.” As blessed as I am to hear this, a reverse mortgage is not a miracle. A reverse mortgage is… well… a mortgage. As such, it will be repaid.

But rather than being repaid on a monthly basis, the loan is repaid on the back end, in reverse. This means homeowners can use their equity without picking up a monthly mortgage payment. The impact of having a tax-free “bucket” to draw on can be truly profound.

If your client, friend, or loved one would like to explore how a reverse mortgage may contribute to their financial wellbeing in retirement, give me a call. I always love hearing from you.

Oh, and that old business card? There’s a new one in the works.

Funding the space between end of health and end of life

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse Mortgage

Laurie MacNaughton © 2022

It’s called health span – and though I only recently became aware of the term, turns out…not a new idea.

This odd-sounding term refers to how long one’s impairment-free health lasts. Some experts refer to this as “healthy life years,” and it is a concept separate from lifespan. What makes this topic significant is that for many older adults there is a years’-long gap between the end of health and the end of life.

Though there isn’t (yet?) a succinct term for it, for many there is another gap – a “finance gap.” It can be summed up simply as the years of life left once the money has run out – and often this chapter of life is accompanied by ever-increasing care costs.

So how do you fund that gap, the gap between the end of health and the end of life? Where does one turn for money once health is declining and finances are depleted?

If you’re very lucky, your adult kids can help. However, rarely is this the best option as that means the kids are using dollars they should be saving for their own retirement. Also, monies gifted to parents typically are not tax deductible by the gifter, and in some circumstances gift money may imperil a parent’s benefits.  

Though it’s an easy default position to judge those whose finances have grown thin, it’s not fair: when today’s retirees started working, lifespans were notably shorter. While it’s entirely possible to work 40 years and save enough for 5 years of retirement, it’s a whole other proposition to save enough for 25 or 30 years of retirement. And, people now routinely live for years with complex medical conditions that once were quickly fatal.

Standard recommendations to improve finances include sticking to a budget, taking a part-time job, and by becoming a “life-long saver,” meaning putting a small amount by each month. But these measures often are impossible once a serious health condition arises.

This is where a reverse mortgage can be a true lifesaver. A reverse mortgage is a seniors’-only home equity line of credit that is repaid when the last titleholder permanently leaves the home; all remaining equity goes to the homeowner, the heirs, or the estate.

Rarely will a reverse mortgage be the whole solution. However, a reverse mortgage can be a significant part of the solution.

This much is certain: none of us is likely to get by on just our Social Security. Few will survive on just an IRA, a 401(k), a pension, or savings – or a reverse mortgage. But when added together, all these can contribute to financial longevity.

If you would like to discuss your financial needs, or those of a loved one, give me a call. I always love hearing from you.

Rarely is a problem too large

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story, FHA HECM, Financial Planning, Laurie MacNaughton, Laurie McNaughton, Retirement Planning, Reverse for Purchase, Reverse Mortgage

Laurie MacNaughton © 2021

It looked like it was heading for a bad outcome: Robert sold his mother’s home and placed her in a care facility.

The problem? Mom was on Medicaid, and her formerly exempt asset was now quite a large countable asset, which spelled big trouble for her care options.

Fortunately, Robert picked up the phone and called an elder law attorney, who listed buying another home among potential cures.

Because Reverse for Purchase has notably easier qualification guidelines, Robert’s mother qualified even on her limited income. And…yesterday she closed on a lovely new home. She is scheduled to move in shortly before Christmas.

Rarely in life is a problem too large. More often, solution sets are too small. In this case, Reverse for Purchase was the perfect fit for a problem that had few other solutions.

If someone you know is in need of options, give me a call. I always love hearing from you!