Tag: Senior Housing

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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!

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

“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

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!

I feel I’ve lived a miracle

by ReverseLady, posted in Caring for Aging Parents; A Daughter's Story

Laurie MacNaughton © 2021

Margaret was 75 when she inherited her mother’s ranch-style home. Because the home had a perfect aging-in-place layout, Margaret and her husband decided to sell their current home and move into the smaller, single-level property. Their current home sold quickly, and they began packing for the move.

But then one tragedy after another struck: Margaret’s husband died suddenly. Margaret lost her job when her employer closed his doors. And then, just days later, the inherited home burned to the ground. And, as fate would have it, the home was uninsured at the time.

Margaret moved in with family while she had the home rebuilt, and funded the construction with proceeds from the home she and her late husband had sold. However, the funds didn’t cover the full cost, so she tried to get a loan to cover the remainder. In the meantime, the contractor finished the work and placed a mechanic’s lien against the property.

She tried lender after lender – but the loan amounts fell far short of what she needed. After all, she was living on just Social Security and a state pension. Though her income was by no means meager, she could not qualify for a loan large enough to pay the contractor.

Months went by, and finally Margaret consulted an attorney regarding her options.

His recommendation? Look into a reverse mortgage.

With a reverse mortgage there is no requirement to prove the homeowner can make a monthly mortgage payment, and consequently Margaret qualified for a far larger amount than she had with a “forward” mortgage. The reason? A reverse mortgage has no required monthly mortgage payment.

The lender must verify the homeowner can cover property charges, including property taxes, homeowner’s insurance, routine upkeep, and condo or homeowner’s association dues, if applicable.

Today Margaret is living in her lovely new home. She has paid all her debts and has no required monthly mortgage payment. When I spoke with her recently she said, “I feel like I have lived a miracle.”

A reverse mortgage is not a miracle – it’s a mortgage. It’s a mortgage that’s repaid on the back-end, in reverse. However, it’s a mortgage that can accomplish results other mortgages often simply cannot.

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

Forbearance-to-Foreclosure Pipeline

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

Laurie MacNaughton © 2021

She’s 78 years old.

She’s 78 years old and heading into foreclosure.

How did she get here? How the HELL did she get here?

A year ago, as allowed for under the CARES Act, she put her home into forbearance. Now one year on she’s newly widowed, meaning she’s got half the income and all the debt, and her home is coming out of forbearance in just a few weeks.

According to correspondence from her mortgage company, she also has a $69,000 lump sum due on her existing mortgage come September 1. If she cannot come up with that amount, per her mortgage company, her home is headed toward foreclosure. She has tried to refinance both with her current lender and with several other lenders.

But here’s the thing: it can be very difficult to refinance if you are not currently making payments. This means many thousands of our seniors may soon be in dire distress.

So back to our 78-year-old.

This past week her banker mentioned the possibility of refinancing using a reverse mortgage.

To answer your question: yes.

Yes I can qualify her.

Here’s why: with a reverse mortgage she does not have to have income enough to make monthly mortgage payments…because with a reverse mortgage there is never a monthly mortgage payment required. Rather, the mortgage will be repaid on the back end – in reverse – when the home is sold. All remaining equity belongs to the homeowner, the heirs, or the estate.

Because homeowners still own their home, they continue to pay homeowner’s insurance, property taxes (unless tax-exempt), and HOA or condo dues, if applicable.

We may well be in the calm before the storm. But our older homeowners currently in forbearance do not have to lose their homes if they can refinance using a reverse mortgage.

Please, please be proactive in asking the hard questions of your loved ones currently in forbearance. You know, as do I, that many older homeowners are not comfortable asking for help – until they’re out of all options they know to pursue.

Do please pass this message on to lenders, bankers, planners, attorneys – anyone in your life who deals with older homeowners.

And do call at any time if you have a client, friend, or family member aged 62 or older who wants to talk. I’m always available.

When Ill-Conceived Rules Go Bad

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

Laurie MacNaughton ©2016

For nearly thirty years FHA’s reverse mortgage program has enjoyed tremendous success in making a way forward for aging homeowners to remain in their own homes. But just like any other loan program, over time guidelines needed to change to reflect evolving realties. In the case of reverse mortgages this included cutting back on available funds to accommodate ever-lengthening life expectancies.

After the housing crisis additional major changes were made to the program, including requiring that every reverse mortgage applicant pass a federal “financial assessment.” This was done to protect the FHA mortgage insurance fund, and to ensure the program’s long-term viability.

Nationally, numbers reflect the fact that some borrowers have indeed failed to qualify under the assessment guidelines – and that may have been necessary.

But now another round of changes is being considered. In addition to raising the bar yet higher, the proposed rules appear plain ill-conceived.

The most problematic of the proposed new rules may be including utilities in the financial assessment, “if failure to pay…utilities would result in a lien on the property.”

A couple things here.

First, what unpaid bill doesn’t run the risk of becoming a lien? I have seen hospital liens. I have seen homeowner association liens. I have seen eye-doctor liens. Why doesn’t FHA just say, “If you’re an aging homeowner and could potentially fall behind on future bills, start packing now”?

Second, there are many, many housing-assistance programs. A quick Google search returns references to hundreds of programs, some federal, some state-run, some private, and many which combine several funding sources.

But most of them have maximum income restrictions, and many, including some of HUD’s own affordable housing programs, don’t kick in until income is 60% below the regional average.

By contrast, as guidelines currently stand, to qualify for a reverse mortgage that enables homeowners to remain in their own home, combined homeowner’s insurance and property taxes are not supposed to exceed 10% of the homeowners’ income (HECM Financial Assessment and Property Charge Guide, §3.98).

So what happens if utilities are now included in that 10%?

Here’s what could happen: fewer homeowners could qualify. And here’s the thing: there is a really big gap between 10% of one’s income going to property taxes and insurance, and financially being in the bottom 30% of one’s region. So where are our aging who fall into the donut hole supposed to go?

I honestly don’t think HUD is trying to turn homeownership into a perk available just to the “welderly,” the wealthiest of our aging homeowners.

But advertently or inadvertently, that certainly looks like what they’re proposing.

E-Signature-LaurieMacNaughton - Doctored 2

Harvard Report Points to Dramatic Senior Housing Shortage

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

Laurie MacNaughton ©2016

Ok, so we’re not exactly dealing with breaking news when we see Harvard’s housing research team reporting a shortage of senior-appropriate housing.

In fact, everywhere we look we see evidence of the shortage in senior-appropriate housing: Warrenton, Leesburg, Middleburg, Reston, Oakton, Arlington – pretty much everywhere you look in the greater D.C. Area you see new construction. But many of the new homes are multilevel “starter castles”…as I call them.

Harvard’s Center for Housing Policy study, titled “Housing an Aging Population,” backs up observations with numbers, and they’re a bummer.

Among other things, the report documents:

Within the next couple decades the population aged 65 and older will increase 120 percent. Over the same period the number of our oldest Americans, those aged 85 and older, will increase more than 200 percent.

Wowzers, right? But here’s where the report gets really scary:

  • The need for appropriate housing will radically outpace the availability of appropriate homes.
  • One in four households aged 85 and older spend at least half their income on housing.
  • Housing challenges are particularly severe for older adults with very low incomes – and most household incomes decline after the age of 85.

The takeaway? Pretty straightforward:

The number of older adults is rising. The need for affordable senior-appropriate housing is rising. But affordable options are not rising.

Not everyone can age in place. That’s just the hard truth. However, for those whose can age in place, everyone involved benefits. But we need to urge our communities to support construction of appropriate housing.

We can do this.

It’s just a matter of doing it.

Laurie

LaurieMacNaughton - 2

 

Retired and Can’t Refi? You’re In Good Company

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

Name Ben Bernanke ring a bell? As in the former chair of the Federal Reserve?

According to his own account when speaking to the moderator of a financial conference this past week in Chicago, Bernanke said, “Just between the two of us…I recently tried to refinance my mortgage and I was unsuccessful in doing so.”

“I’m not making that up,” he added when the audience laughed, his comment sounding vaguely like an homage to humorist Dave Barry.

And what was the conference Bernanke was addressing? None other than the National Investment Center for Seniors Housing and Care.

So that was October 2; fast-forward one day to October 3, 2014. I met with an aging homeowner and her adult son. The mother suffered an adverse health event and has had to quit her job. She is now struggling to make her monthly mortgage payment, and does not want to deplete her savings…only to be back in the same boat once savings are gone. Like Bernanke, she tried to refinance but was unsuccessful in doing so.

She considered selling her home, until she did the math and realized proceeds from the sale would not last as long as she’s hoping to.

A relative told her to look into reverse mortgage.

What does this accomplish?

  • One – never again does she have a monthly mortgage payment.
  • Two – she now has a cash buffer, in addition to other savings, as a rainy-day fund.
  • Three – she never has to move, unless she wants to.

Property taxes, if applicable, are still due, as is homeowners insurance, and routine home maintenance remains the homeowner’s responsibility – in other words, it’s still her home.

And even though the program has now been around decades, it still bears mentioning that the bank does not own the home. Title remains in the homeowner’s name. Or, to repeat myself – it’s still her home.

A reverse mortgage cannot fix all the challenges associated with aging. But a reverse mortgage can often fix one of the most vexing issues, namely financial insecurity as it relates to seniors’ housing.

As I’ve said many times, in retirement no one is going to get by on just their Social Security. No one is going to make it on their 401-K. Few are going to survive on their pension, their annuity, their IRA, their bank account – or their reverse mortgage. But when added together, all these combine to create a long-term means of maintaining dignity and independence in retirement.

If you would like to explore how an FHA-insured reverse mortgage might help with your retirement plans or those of your loved ones, give me a call. I always love hearing from you.

Laurie

Laurie MacNaughton [506562] is a freelance writer and Reverse Mortgage Consultant with Atlantic Coast Mortgage.

She can be reached at 703-477-1183 Direct or Laurie@MiddleburgReverse.com