Curious about how a reverse mortgage may impact your Social Security benefits? Get the facts and make informed decisions about your retirement income with our comprehensive guide!

If you’re approaching retirement or have already retired and are considering a reverse mortgage, you may be wondering if receiving a lump sum payment or monthly income from a reverse mortgage could reduce your Social Security or Medicare benefits.

According to the Consumer Financial Protection Bureau and elder care legal advisors, reverse mortgages will not affect Social Security payments or Medicare benefits. The reason? These benefits are not connected to income qualifications. Everyone who is age-qualified for Social Security is entitled to receive them.

How Do Reverse Mortgages Work?

Reverse mortgages are home loans that use the equity that you have in your home. If you’ve owned your home a long time, especially if the mortgage has been paid off or is close to being paid off, you have a significant amount of equity.

Reverse mortgages have been created to help retirees to have access to funds they may need for home repairs or for living expenses. They can give people peace of mind knowing that they will be able to pay for their ongoing living expenses.

Other Concerns With Reverse Mortgages

Some people do not receive regular Social Security checks, but instead, supplemental security income (SSI). Reverse mortgage income may affect SSI and Medicaid benefits. It must be reported to the Social Security Administration, unless you take only the funds you need each month and use them completely.

Why? Because SSI and Medicaid are means-related benefits. Reverse mortgage funds that you do not completely spend in the same month you receive them could be counted as assets, affecting these means-tested benefits.

However, older adults who receive Social Security and Medicare benefits are not in the same means-tested category as SSI and Medicaid recipients.

Learning About Reverse Mortgages

A reverse mortgage is a home loan that can provide older adults with income or access to a line of credit to use as they need it. It’s important to understand your unique financial circumstances and how a reverse mortgage could benefit you and your loved ones. Learn your options in reverse mortgage by talking with a qualified and experienced mortgage broker about the reverse mortgage process through California Platinum Loans today. 

Sources: 

Consumer Financial Protection Bureau, “Reverse Mortgage: A discussion guide,” August 2021

Moen Sheehan Meyer Elder Care Attorneys, “Does A Reverse Mortgage Affect Social Security or Medicare?,” 13 June 2022

Single-Family Construction Spending Rose by One-Third Last Year, what does this mean to us average folks today

Rising Rates Propel Surge in Refinancing

The week of January 28th had the highest non-holiday-related increase in mortgage volume since the last week of March 2020, after a 7% drop the previous week. According to the Mortgage Bankers Association (MBA), its Market Composite Index, which measures mortgage loan application volume, jumped 10.0 percent from a week earlier. 

The Refinance Index gained 18 percent from the previous week. Refinancing accounted for 57.3 percent of applications, up from a 55.8 percent share the last week.  It appears that the recent rise in mortgage rates has spurred a new round of homeowners rushing to take advantage of the still-low rates before they increase further.

Single-Family Construction Spending Rose by One-Third Last Year

In 2021, construction spending reached $1.599 trillion, up 8.2% over the previous year’s $1.470 trillion. With a 22.9 percent increase, public and private residential expenditures were the only sectors with double-digit growth, while several other categories saw spending decline.

According to the US Census Bureau, all types of construction investment increased by 0.2 percent in December from November to $1.640 trillion, up 9.0 percent over the previous month. 

There was strong growth of spending on single-family and multifamily construction, while spending on improvements slipped. Single-family construction spending increased to a $435 billion annual pace in December, up by 2.1 percent over the upwardly revised November estimates,” said Na Zhao, an analyst with the National Association of Home Builders (NAHB).

Home Price Appreciation Update Including 2022 Forecast

In the 12 months ending in 2021, home prices increased by 15% year over year, compared to a 6.0 percent increase in 2020. Compared to the previous December, CoreLogic’s Home Price Index (HPI) was up 18.5 percent.

This year’s price projection from CoreLogic predicts a ten percent increase in the first three months, followed by a gradual decline to 3.5 percent by December 2022. After that, on average, the increase will be 9.6% per year. 

At 28.4 percent, Arizona is still the state with the most significant increase, followed by Florida at 27.1 percent and Utah at 25.2 percent. At 37.6 percent and 35.7 percent, respectively, two Florida communities, Naples and Punta Gorda saw the highest gains among metro regions.

Next week’s potential market moving reports are:

  • Monday, February 7th – Consumer Credit      
  • Tuesday, February 8th – Small Business Index, Real Household Debt
  • Wednesday, February 9th – Wholesale Inventories
  • Thursday, February 10th – Initial Jobless Claims, Continuing Jobless Claims, Federal Budget
  • Friday, February 11th – Consumer Sentiment Index, 5-Year Inflation Expectations

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

Maximize your mortgage potential with a solid understanding of Loan-to-Value (LTV) ratio. Unlocking the Secret to Mortgage Success.

Unlocking the Secret to Mortgage Success

When you plan to buy a home and need a mortgage, you’ll encounter the loan-to-value ratio (LTV). Lenders use the LTV ratio to assess your risk as a borrower and decide the terms of your mortgage. It’s the percentage of the loan amount compared to the property’s value. For instance, if you want to borrow $200,000 for a $250,000 home, the LTV ratio is 80% ($200,000 / $250,000).

Calculating the LTV Ratio:

To find the LTV ratio, divide the loan amount by the property’s appraised value or the purchase price, whichever is lower. A professional appraiser determines the appraised value.

Imagine a home’s purchase price is $300,000, and its appraised value is $290,000. The LTV ratio uses the lower value: of $290,000.

Loan Amount / (Appraised Value or Purchase Price) = LTV Ratio

If you want to borrow $240,000, the LTV ratio is 82.76% ($240,000 / $290,000).

Why LTV Ratio Matters and Its Benefits:

Knowing your LTV ratio matters because it impacts your mortgage terms. A higher LTV ratio makes the loan riskier for lenders, which could lead to higher interest rates, stricter requirements, or the need for private mortgage insurance (PMI).

To avoid PMI, aim for a down payment of at least 20% of the purchase price, resulting in an LTV ratio of 80% or lower. Some mortgage programs, like FHA and VA loans, allow for smaller down payments and higher LTV ratios.

Additionally, understanding your LTV ratio helps you figure out your home equity. As you make mortgage payments, your LTV ratio drops, and your equity grows. This information is helpful if you plan to refinance or sell your home.

Grasping the loan-to-value ratio is essential when obtaining a mortgage. It helps you comprehend your risk as a borrower and your mortgage terms. To lower your LTV ratio and save money long-term, consider a larger down payment or explore various mortgage programs.