When do you plan to retire? Have you saved enough for your golden years or explored options for funding retirement, such as reverse mortgages or postponing retirement?

About 46% of people polled by the Retirement Readiness Index said they will delay their planned retirement age. The survey, conducted by the MetLife Mature Market Institute, found that men were more likely to have thought about whether or not they were financially prepared for retirement. Of those polled 52% said they are behind in their retirement goals and 25% said they were significantly behind. Only 28% said they are on track or already have met retirement goals.

Retirement planning tools

Planning for retirement is not something that happens overnight. Retirement planning should occur throughout your work life and may need to be adjusted as you go along. The MetLife Mature Market Institute has a retirement planning book that can help you prepare even if you don’t have too many years before retiring.

If you are like many Americans who managed to build a retirement savings over your working years, only to find your plans derailed by the economy, it’s important to find the right strategy to boost your retirement income. A housing counselor can review reverse mortgage guidelines with you to determine if borrowing against home equity could help supplement your retirement income. Other alternatives may be available, such as programs for seniors in your community. You can also begin comparing reverse mortgage quotes here.

Reverse loans aren’t your only option for funding retirement, so it’s important to discuss other alternatives that can help. A qualified estate planner can help put together a comprehensive strategy for your retirement years.

The percentage of Americans aged 55 and up who filed for bankruptcy rose 61% from 2002 to 2007, according to a recent study released in the ABI Journal. Baby boomers born between 1946 and 1964 made up 42% of all people who filed for bankruptcy in 2007.

Boomers lower home equity

“The recent housing crisis has worsened the already precarious financial condition of many older Americans,” according to the study. States where the home price index fell saw bankruptcy filings more than double as many boomers were left with little or no home equity.

The study, written at the Administrative Office of the U.S. Courts, found that the median age for bankruptcy filers rose to 44.9 years in 2007 from 37.7 years in 1994. People under 25 only accounted for 1.7% of filers in 2007, compared with 4% in 2002.

Can a reverse loan help?

If you are at least 62 and dealing with financial problems, do your best to avoid bankruptcy. Having some home equity could result in you getting a reverse mortgage. Borrowing with a reverse home mortgage should be explored only after you’ve evaluated other options for straightening out problems with money.

Pros and cons of reverse mortgages

The good thing about a reverse loan is that you can use the money for pretty much any purpose. A reverse mortgage also does not have to be paid back until you sell your home, move, or die. Plus, you can never owe more than the property is worth at time the reverse loan is repaid.

On the negative side, reverse mortgages have been known to have high fees. That could change though as the Department of Housing and Urban Development plans to offer a modified Home Equity Conversion Mortgage (HECM) with lower upfront costs. Another drawback is that you gradually strip your home of equity, which could leave you with little property to leave to heirs.

If you are considering bankruptcy, speak with a credit counselor and bankruptcy attorney to explore your options. A qualified housing counselor can also help you learn more about reverse mortgages.

Oregon has asked a reverse mortgage lender to stop sending deceptive mailings about reverse loans to residents of the state. The Oregon Division of Finances and Corporate Securities said mailings about reverse mortgages that were sent by EquiPoint Financial Network Inc. of San Diego do not comply with its marketing rules for mortgages, according to Oregonlive.com.

Reverse Mortgage Mailings

The state of Oregon asked the company to include its name in all mailings and remove language that implies the reverse mortgage lender has a relationship with any government agencies. Mailings from Equipoint imply that its program is part of the federal stimulus package. They also feature a picture of financial guru Suze Orman with a quote from her that encourages seniors to consider reverse loans. The state sent a letter to EquiPoint in May and June but has apparently not heard back from the company yet, according to a spokeswoman for the Oregon Division of Finances and Corporate Securities.

Investigate Reverse Loans

The takeaway from all this is that it’s important to find out as much information as you can about a reverse mortgage lender before signing up. Unscrupulous companies can make all kinds of claims to get you to sign up for their products and services. Before doing business with any reverse loan company check out its reputation in your community. Contact your state’s Attorney General to find out if there have been any complaints.

Get HECM Counseling

If you really think getting a reverse home mortgage is a good move, talk with a qualified and reputable housing counselor. You can find a counselor approved to discuss the Home Equity Conversion Mortgage (HECM), the most popular type of reverse loan in the U.S., through the Department of Housing and Urban Development (HUD). No obligation Revers loan quotes from reputable lenders also can be found here.

For those who are reaching the age when Social Security matters, generally age 65, 66 and above, the latest arguments about the program are hardly re-assuring.

In basic terms there are several debates going on at once.

First there’s the question of when benefits should occur; that is, what is “full retirement” age. The Social Security Administration has a list of ages and full-retirement benchmarks, retirement dates which currently run between age 65 and age 67.

But, there’s now a proposal to raise the full-retirement age to 70.

House Minority Leader John Boehner (R-OH) told the Pittsburgh Tribune-Review that he would like to see the retirement age increased to 70 — but only for people who will not retire for at least another 20 years. Such an extension would reduce financial strains on the system, but is age 70 the new 65?

The initial reaction to Boehner’s suggestion was both read more

More homeowners over 62 are turning to reverse loans, according to the 2009 American Housing Survey. The number of reverse mortgages in the U.S. rose 59% to 252,000 in 2009 from 159,000 in 2007. The survey is issued every two years by the U.S. Census Bureau and Department of Housing and Urban Development.

Housing Costs Rise

The survey also found that the number of homeowners without mortgages fell 1.3% to 24.2 million in 2009 from 24.9 million in 2007. The data show that 66% of homeowners have a regular mortgage and/or home equity mortgage, and that 2% have only a line of credit.

It also found that U.S. homeowners pay a median of $1,000 for monthly housing costs. Renters pay a median of $808 for housing costs, but they are more likely to spend a larger percentage of their income on housing (31% vs. 20% for homeowners).

Majority Like Where They Live

People polled also were mostly happy with where they lived. About 70% rated their homes an 8, 9, or 10 on a scale of 1 to 10; 28% rated their homes a 10. People who lived in new construction were the most content with their housing, with 84% rating their homes an 8, 9, or 10; 45% rated their residence a 10.

The survey looks at a variety of topics related to the nation’s housing. It includes data on the features in homes, including air conditioning, types of heating, layout of homes, and availability of special living services for seniors. Not surprising, people who lived in newer homes tended to have more bedrooms and bathrooms.

All decisions involve some sort of trade-off. With a reverse mortgage that trade-off is giving up some of the equity in your home for the convenience of having cash now. Consider the following reasons why this may or may not be a good idea.

• Owning a home free and clear is a dream that many people share. Not having a monthly mortgage payment frees up income for other expenses, such as medical bills, hobbies, or travel. A paid off home also can give you a sense of financial freedom. Reverse mortgages don’t have to be repaid until you leave your home, however, so you won’t have to make monthly payments.
• You can apply for a reverse home mortgage at the age of 62, which means that there is a potential to outlive the proceeds of the loan (unless choose to receive monthly payments for life, or tenure). The average life expectancy in the US is 77.9 years, according to the Centers for Disease Control and Prevention. Women on average outlive men. Before borrowing with a reverse mortgage, work with a housing counselor to assess the current state of your finances. It’s important to know exactly how a reverse loan may or may not help you.
• Have you thought about any reverse mortgage heirs who might have to settle your estate? Borrowing against your home equity means that you may have less to leave to your kids. They would have the option to pay off the reverse mortgage if they want to keep the house or sell the home and pocket any profit made in the deal. They also could choose to do nothing and let the reverse mortgage lender take the house.

You can get more information about reverse mortgage guidelines by talking with a housing counselor. You can also search for reverse loan quotes here.

Frugal is in, and it seems like everybody and their mother’s brother has advice on how to save a few bucks. If you are looking for ways to make your income stretch further, consider some of the following ideas.

1. Downgrade your lifestyle. Consider selling your money-guzzling home and moving to a less expensive place. Doing so can save you money on monthly housing payments, utilities, and maintenance services such as lawn care. You can still be a homeowner, but if you have an empty nest and really need to make your dollars stretch further, it may be time to give up the McMansion. If you’ve been thinking of tapping your existing home equity by getting a Home Equity Conversion Mortgage (HECM), the proceeds can be used to purchase a less expensive home.
2. Focus on relationships and experiences. Instead of always splurging on big-ticket outings, look for free or low-cost activities that allow you to make new friends and spend quality time with family. Also consider volunteering or finding other ways to give back in your community. A recent MetLife Mature Market Institute study found that people who have meaning and purpose in their lives tend to be happier no matter their age.
3. Get help from a qualified debt counselor or housing counselor. A debt counselor can help you address any spending issues your have that may be keeping you a slave to debt. A housing counselor can discuss a variety of options that may improve your finances, including reverse mortgages, refinancing, loan modifications, and local community programs aimed at helping seniors.

Putting together an action plan to embrace frugality can help reduced stress related to money. It also can help you stay focused on the ultimate goal of enjoy a comfortable retirement.

When it comes to the Social Security system I am as mystified as anyone. There’s a lot of jabber on the subject yet I have never met anyone entitled to a monthly check who did not get it.

I bring this up because most of those who reach retirement age depend on Social Security for part of their income, along with private pension dollars, dividends, interest, rents, royalties, and work — either part-time or full-time.

How you get income upon retirement greatly influences any decision you might make regarding reverse mortgages. For some individuals a reverse mortgage can be a sensible financial decision, especially if it replaces a mortgage that requires monthly payments for principal and interest with a loan which does not. For others, a reverse mortgage won’t be the right choice.

Social Security

The Social Security system was established in 1935 and from day one had its critics, some of whom had legitimate gripes. For instance, the original program was a benefit for those who reached age 65 but life expectancy in 1930 was 62 for women — and 58 for men. Today, of course, people live a lot longer and millions get benefits.

The latest gripe is that read more

The Federal Reserve wants reverse mortgage lenders to make the terms of loans clearer for borrowers. The Fed proposed that reverse mortgage disclosures be changed so that consumers have a better understanding of the pros and cons of borrowing money.

Reverse mortgage disclosures

Disclosures for reverse loans are usually very lengthy and don’t always do great job at describing the features of loans. The proposed changes would make language in disclosures easier to understand and would give information that pertains specifically to the borrower’s actual mortgage terms.

Reverse loan counseling

The proposed changes also are aimed at protecting consumers from pressure to buy other financial products, such as pricey annuities. Some reverse mortgage lenders have been aggressive about getting borrowers to sign up for pricey annuities or long-term care insurance. The proposed rules would keep reverse mortgage lenders from making borrowers agree to purchase other financial products in order to get approved for a reverse loan. The rules also would require that borrowers receive reverse mortgage counseling before a creditor could impose nonrefundable fees for a reverse loan or close on a loan.

Reverse mortgage guidelines

Reverse mortgages can be a useful financial tool for seniors looking to supplement their incomes. But it is important for anyone interested in borrowing money this way to make sure they are getting all the facts about reverse mortgage guidelines. Never sign paperwork for a reverse home mortgage without having all your questions and concerns addressed by a reverse mortgage counselor first.

The government announced that it plans to give additional help to homeowners who are facing foreclosure. The U.S. Treasury Department is giving an additional $2 billion to the 18 hardest hit states to assist homeowners who are unemployed and facing foreclosure.

“We remain committed to helping struggling homeowners, and this program will provide additional assistance to states hit hardest by unemployment,” Assistant Secretary for Financial Stability Herb Allison in a statement.

Higher than average unemployment

The hardest hit fund offers financial support to the states that have had an unemployment rates above the national average over the past 12 months. The funds go to a variety of state and nonprofit agencies that work with struggling homeowners.

The Treasury Department also plans to launch a $1 billion Emergency Homeowners Loan Program to help homeowners who’ve taken a financial hit due to involuntarily unemployment, underemployment, or a medical condition.

Who can be helped

Homeowners who are eligible for help under the hardest hit program must:

• Be at least three months delinquent on payments and reasonably likely to be able to resume repaying their mortgages within two years
• Have a mortgage on a principal residence and own no second home
• Must demonstrate a stable payment history before their loss of income

Other options include reverse loans

A housing counselor can help determine if you live in an area that is eligible for assistance through the program. A counselor also can discuss other options that might help you avoid foreclosure, such as reverse mortgages. Homeowners who are 62 and up can apply for a reverse loan, but reverse mortgages are not right for everyone. Consider other solutions first, like refinancing or selling your home.

It was last October when HUD changed its reverse mortgage rules. Now we can see the results and it’s mission accomplished. Whether that’s a good thing or not is a matter worth discussing.

In essence, HUD reduced the principal limits for its home equity conversion mortgage program. Borrowers still had access to HECM financing, but not so much.

The reason for the change was that HUD was losing big money on the program. Congress, in its wisdom, determined that the best way to fix the HECM effort was to change the program’s terms. As HUD explained, the purpose of the lower principal limits was “to assist with the viability of the program. The new principal limit factors must be used for all HECMs for which the FHA case number is assigned on or after October 1, 2009.”

Okay, so a lot of time has passed since October 1st, the start of the government’s fiscal year. What’s happened?
read more

More Americans are rethinking their plans to retire. Almost half of people recently polled by a Merrill Lynch survey said they plan to postpone retirement longer than they had planned, according to Reuters. Merrill Lynch polled 1,000 Americans with liquid assets of at least $250,000.

The poll also found that half of those polled expect to rely on workplace retirement plans to fund retirement. However, 60% of those people said they are not contributing the maximum amount to plans such as 401(k)s.

Boosting Retirement Savings

If you’re scrambling to catch up on your retirement savings you, too, may need to rethink your retirement planning. Among your options are working longer, which gives you more time to build up your savings. During the time you continue working it’s important to contribute the maximum that you can to your retirement plan. If you’re over 50 you can also make catch up contributions to retirement plans. The catch up contribution is $1,000 a year for an IRA and $5,500 to a 401(k) in 2010.

Pros and Cons of Reverse Mortgages

Borrowing with a reverse mortgage is another option that people who are 62 and up may consider to help fund retirement. A reverse loan allows you to convert some of your home equity into cash. The money can be used for any purpose and does not have to be repaid until you leave your home.

Reverse mortgages have pros and cons, and it’s important to speak with a knowlegable housing counselor who can help you decide if borrowing money will effectively help fund your retirement. The housing counselor should do a thorough analysis of your financial situation and discuss other programs and services that may be helpful.

In additon to discussing your situation with a housing counselor, it may make sense to find an estate planner who can help you put together a comprehensive retirement plan.

You may be looking for a way to get your hands on some cash to help pay for your expenses. While boosting your regular income through employment is usually the best way to improve your cash flow, that isn’t always possible, especially in this tough job market. If times are tough, you may find yourself borrowing money to meet your needs.

Borrowing money should not be your first choice when trying to boost your income. However, if you are facing this choice, consider pros and cons of two popular methods of borrowing that are popular with seniors: reverse loans and credit cards.

Reverse Mortgages Pros and Cons

Reverse mortgages allow you to convert the equity in your home into cash. The money is paid out as lump sum, through installments, or as a line of credit. On the plus side you don’t have to repay the money until you leave your home and you can spend it however you want. Drawbacks to reverse loans are that the fees can be steep and you could end up outliving the proceeds, depending upon how you manage the money. You also must be at least 62 to apply for a reverse loan.

Credit Cards

It’s likely that you already have a credit card, and you may receive offers for cash advances and balance transfers at low introductory rates. While credit cards are easy to use, they aren’t always easy to pay back. Most credit cards have high interest rates, and your balance can rise quickly if you don’t pay it off each month. Also, credit cards automatically jump to the default rate if you are late with payments. Tack on late fees and you could find yourself struggling to keep up with credit card bills, especially if you are on a fixed income.

Reverse Mortgage Counseling

Before choosing to apply for a reverse home mortgage or use credit cards to take care of your expenses, talk with a housing counselor to discuss your situation. Borrowing money may not be the solution, so it’s important to find out what alternatives are available so you can choose the right path to improve your financial situation.

Reverse mortgage counseling is required before you can apply for a loan. So what can you expect from a reverse loan counseling session, and how do you know which counselors are knowledgeable about these mortgage products? Use the following tips when scheduling a counseling session.

• Anyone who offers counseling about Home Equity Converstion Mortgages (HECMs) must pass an exam that is approved by the Department of Housing and Urban Development (HUD). They also are required to have access to technology that allows HUD to track the results of counseling to clients and retake the HECM exam every three years.
• Reverse mortgage counselors must give clients a copy of the National Council on Aging’s (NCOA’s) 28-page booklet on reverse loans.
• Reverse mortgage counselors also are being required to use the Financial Interview Tool (FIT) when working with potential borrowers. FIT is a series of additional questions that counselors can ask about a borrower’s financial situation that might influence whether or not a reverse mortgage is appropriate for their situation.
• Counselors also use the NOA’s BenefitsCheckUp, which determines whether seniors are getting access to benefits programs for people with limited income and resources. It has informaton on more than 2,000 public and private benefits programs.

No Obligation with Reverse Mortgage Counseling

Just because you get reverse mortgage counseling doesn’t mean you are obligated to borrow money. Counseling should familiarize you with reverse mortgage guidelines so that you can make the right decision for your situation. A reputable and knowledgeable counselor uses the interview process to determine what your personal needs are and informs you of alternatives to getting a reverse loan.

If you choose to apply for a reverse mortgage after getting counseling, you can begin shopping for loan quotes here.

I spent much of the weekend in an emergency room and that’s not a place where you want to be.

As it happened my aunt developed an intense pain in her abdomen and went to the hospital. I spent the next nine hours with her in the ER until she was moved to the hospital for surgery the next day.

I bring this story up on a site for reverse mortgages for several reasons.

First, my aunt is a senior with Medicare and supplemental coverage under a health insurance plan. Her bill will be enormous, but her actual cash cost will be a few dollars.

Second, you don’t want to go to an emergency room if it can be helped. The EMTs, nurses, doctors and technicians are being asked to do terribly difficult work under great stress. What they do is literally heroic. While I was there a seven-year old child with a heart condition passed away. It was awful for everyone.

Third, the odds are overwhelming that at some point we will all need health services of some sort. While Medicare helps seniors, the cost of health services is so great that even owing a small percentage of the bill can be bankrupting for many households.

Reverse Mortgages

I am one of those who thinks there are circumstances where an FHA home equity conversion mortgage — an HECM or reverse mortgages — is an appropriate and valuable financial tool. One of those circumstances concerns health insurance.

Let me explain:

The cost of even a brief hospital stay is huge. A single day in the hospital can cost thousands of dollars. Moreover, there are follow-up expenses and more costs.

There’s a lot of justice to these expenses when you look at the price of technology, the requirements for quality care and the wages which should be paid to healthcare professionals. That said, a cost is a cost.

For the 12 months ending in March we had 1.5 million bankruptcies — that’s up 27 percent from the prior year. The traditional causes of bankruptcy are loss of job income, divorce and medical expenses from accidents and illness.

If you do not have adequate medical coverage you can be impoverished with a single accident, disease or fall. It makes sense to plan ahead and get supplemental coverage.

The good news is that such coverage is typically inexpensive — at least in relative terms once you have Medicare. That said, a premium is a cost….

You can pay for supplemental coverage from your funds. If money is an issue, then perhaps adult children — those reverse mortgage heirs — might want to chip in. Alternatively, you can get supplemental Medicare coverage and pay for it monthly or when you need to from a reverse mortgage that has a line of credit.

The world of senior health insurance is complex. For advice, speak with local physicians, community groups and attorneys who specialize in elder law. Check for limitations and caps. Review costs. See what works best for you.

As for my aunt, she had surgery and will be fine, both physically and financially. One hopes in similar circumstances that everyone else would have the same results.