Susan A. Pomfret RICP, USA Mortgage

Susan A. Pomfret RICP There are many misunderstandings about Home Equity Conversion Mortgages (HECMs). Something everyone can agree on is that HECMs offer an avenue for older homeowners to use a portion of the equity in their homes to supplement their income in retirement. You may have heard some other things about HECMs that are misleading. Lets separate fact from fiction. Myth #1: I wont own my home. Fact: Just like a regular mortgage, you keep the title to your home. The lenders interest in your property extends only to the balance of your HECM loan.Myth #2: I wont have anything to leave my children. Fact: The loan is not due until the last borrower dies, moves out, or sells the home. If you pass away, your heirs can either sell the home or refinance it. The HECM lender will receive the amount owed on the loan. In addition, you cannot borrow the full appraised value of your home, and home values have risen steadily in recent years. This creates two ways in which there may be equity for your heirs after the home is sold and the loan is repaid. Please note there is no guarantee that your homes value will stay the same or increase.Myth #3: I cant sell my home. Fact: You can sell your home just as you would if you had a regular mortgage. The HECM will be paid off with the proceeds from the sale, and you will receive the remaining funds.Myth #4: Ill have to pay taxes on the funds I receive from the loan. Fact: Proceeds from a HECM are usually income tax-free, but you should always consult your tax advisor to make sure you understand any tax consequences.Myth #5: I have to pay off my current home loan before I can apply for a HECM. Fact: The HECM will pay off your existing mortgage, and then the funds available to you will be based on the equity in your home and amount the program allows you to borrow.Myth #6: There are restrictions on the way I can use the funds from the loan. Fact: You can use the proceeds from a HECM any way you wish. Your home may well be your greatest asset, and wise use of these funds can give you greater security in retirement.Myth#7: I should only consider a HECM as a last resort. Fact: Rather than considering a HECM as a last-ditch effort to raise retirement funds, financial planners are making it part of comprehensive retirement planning. Uses for HECM funds include paying for long term care, improving cash flow, remodeling your home to allow aging in place, paying off higher interest consumer debt, and delaying the start of Social Security so the monthly benefit amount can grow. If you have additional questions about HECMs or Reverse Mortgages, I'm here to help. Call me today for more information about this retirement income option. 401-595-7300.

A HECM for Purchase allows those 62 and older to purchase a primary residence, there is also a Reverse Mortgage for Purchase product for those 55* and older (*in most states).Borrowers are realizing the benefits of using a HECM for Purchase and how they can improve their retirement and live a more financially stress-free retirement.Home Equity Conversion Mortgage (HECM): What is it? A loan for homeowners 62+. Must apply to the borrowers primary residence. Proceeds available determined by age of the youngest borrower, expected interest rate, and property value (2024 HUD national lending limit: $1,149,825). Must be SFR, 2-4 unit, townhome, or an FHA-approved condo or manufactured home. Borrower is responsible for paying property taxes, insurance, and any other property charges, as well as upkeep of the property. Loan becomes due when borrower sells, no longer maintains the home as a primary residence, or the last remaining borrower passes. Reverse Mortgage Jumbo products are available for higher home values (loan amounts up to $4 million) for homeowners 55* and older. Borrower safeguards Independent HUD counseling is required prior to loan application. Financial assessment is required for loan approval (no FICO score or DTI requirements). Life Expectancy Set-Aside (LESA). Capped interest rates. Full disclosure of costs.ExampleMary (age 75) wants to move and right size to a home that is better suited for her. She currently pays roughly $1500/mo. for her current mortgage.She figures she will net about $375,000 from the sale of the current property and ideally would like to purchase a home outright so she can eliminate the burden of a mortgage payment.Problem! Marys forever dream home that she has fallen in love with is $500,000. So, her real estate agent introduces her to the option of a HECM for Purchase loan.Marys HECM for Purchase option:Purchase price of forever dream home: $500,000.Proceeds from sale: $375,000.HECM for Purchase down payment: $216,966 (assuming buyer is paying all fees).Remaining proceeds from sale: $158,034.Realized funds without HECM for Purchase: $0.Realized funds with HECM for Purchase: $158,034. *For illustration purposes only. 12,000 people that turn 65 each day* 34% of all homeowners are over 60 years old** Is a HECM right for you? Contact me today to learn more at spomfret@usamortgage.com or 401-595-7300.Sources:*https://www.cnbc.com/2017/10/03/health-care-dilemma-10000-boomers-retiring-each-day.html** https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf  

Susan A. Pomfret RICPI am sitting at a kitchen table educating Mary (82) about how a HECM may benefit her. Once I started asking her questions about what struggles she is having, I was hit with a lot more than I thoughtshe is not only having difficulty financially, but also emotionally. Are you prepared for this? You better be. As a HECM expert, you need to be sure you are an all-around resource for the seniors you meet.Mary began to tell me that when her husband passed away, learning to live on one Social Security check was frustrating. She soon realized what bills she needed to pay and what things she would have to do without. Obviously, as she aged, her health care costs increased and most of her money went toward that and her home. She said she was fine with that because she had no plans to leave the home that she had been in for more than 45 years. It is where she raised her children and where her grandchildren and great-grandchildren now enjoy playing in the beautiful backyard.She started to tell me how, at times, she is lonely and sad, and that most of her lifelong friends have passed. I asked her if she gets involved in her local senior center and she said, The people there are too old for me. I responded, That is why they need you! Have you ever considered volunteering? And it would be a good excuse to get out of the house a few hours a week.I always carry around my states Department of Elderly Affairs Pocket Manual, so I was able to give her a contact to call. I also mentioned to her that we have a program called The Friendly Visitor that she may want to look into. I told her my mom was involved with this program and developed a lovely friendship with the woman who came to visit her each week. My good old pocket manual also had that information.From there, she was telling me that this winter had been very difficult (those of us in New England can surely relate to that). She mentioned that she had to get oil so frequently that when it was delivered, she would tell them to just fill it halfway. I informed her about our states heating assistance program, which she was not aware of.And yes, you guessed it, I was able to give her the information from my pocket manual along with the number to Rhode Island Saving Energy (RISE), who will come to a seniors home and perform a free energy-efficiency evaluation. They will even replace old light bulbs with energy-efficient ones for free, and possibly install a new, energy-efficient refrigerator at low or no cost! As I continued to help Mary with some of her difficulties, I saw that her mood picked up and she was much more optimistic than when I first arrived. As I continued to help Mary with some of her difficulties, I saw that her mood picked up and she was much more optimistic than when I first arrived.This is just one example of how I was resourceful to Mary beyond a HECM. I was able to address her issues right on the spot. Would a HECM solve some of these issues? Absolutely, but given that these programs are available to her, why wouldnt I share my knowledge about them with her?So, lets get back to the HECM. After identifying some other issues, Mary realized that the program would truly relieve some of her financial stress and she decided to move forward. A few months after closing, she called to thank me again for all my help. Best calls ever, right? As I told her before, it was my pleasure and I aim to be as resourceful as possible. She wanted me to know that she is volunteering at the senior center three hours a week and loves it. She has even met some new friends because of it. She also signed up to be a Friendly Visitor and makes weekly visits to two senior ladies who are homebound, and she is grateful to be making a difference in their lives. By doing these two things, Mary thinks she is helping others, which she is. Just as importantly, she is helping herself, without even realizing it.Sure, I helped her with her financial struggles by helping her obtain a HECM, but I also got her out of her isolation and gave her a new purpose. By the way, she told me she took advantage of the heating assistance program and RISE. Now that spring is finally here, she is looking forward to purchasing a new swingset for her yard for the kids to enjoy.Ironically, as I was writing this story, I received a call from a gentleman about his adult sister. She has severe disabilities, and between her mortgage and credit card debt, she is struggling each month. Unfortunately, she is only 56 years old, so I was not able to help with a HECM, but I was still able to be a resource to him by giving him information on our local housing agency that may be able to refinance her into a very low interest rate, along with a debt counseling agency that can help negotiate with her creditors to reduce her interest rate and monthly payments, making things more manageable for her. So, I guess the lesson learned here is how truly important being a resource to people really is!Lastly, I am fortunate that my state has various senior nonprofit organizations, where I volunteer. Giving back is very important to me. It not only teaches me about what is available for my clients (things that are not in my pocket manual), but also allows me to build awareness about HECMs and show people that HECM professionals really do care about helping our seniors.Writers Note: March 2024. I am happy to say that I am serving the Southwest FL area and can be as resourceful given my referral partners and the Seniors Blue Book. Reach out today for more information, 401-595-7300 or spomfret@usamortgage.com

Susan A. Pomfret RICP Did you know you can help your clients 55 or 62 and older reduce their monthly housing obligations? We all have enough concerns now, so wouldnt it be of value to help your clients lower their stress about paying their monthly mortgage payment, credit card bills or installment loans? Perhaps you have baby boomer clients who are helping their elderly parents financially? Senior housing wealth has reached over $13 trillion* and may offer financial relief. By tapping home equity with a Home Equity Conversion Mortgage (HECM), those 62 and older can have flexible options. They can choose to receive HECM funds through a monthly payment, line of credit, initial draw, or a combination of methods. An even better feature is that no matter how they decide to take their funds at closing, they can change their payment plan at any time, as often as they need to throughout the loan.** Flexible options are very important as seniors navigate retirement, not only because their lives change as they get older, but also because they will have a tax-free*** safety net when they need it most, even for unexpected events.For those 55 and older there are similar choices available with Portfolio Jumbo Reverse Mortgage Products. Though they are not available in every state, and have some restrictions on payment plan flexibility, these loans are still a good option to consider.In 2014 the Financial Industry Regulatory Authority (FINRA) updated their Investor Alert about Reverse Mortgages, noting that recent changes to the program added additional safeguards for the borrower. They also stated FINRA is issuing this Alert to urge homeowners thinking about reverse mortgages to make informed decisions and carefully weigh all of their options before proceeding. And, if you do decide a reverse mortgage is right for you, be sure to make prudent use of your loan. As with any financial product, clients need to rely on an experienced professional to educate them about the risks and benefits to ensure they are making an informed decision. You can learn more at ttps://www.finra.org/sites/default/files/InvestorDocument/p517004.pdf There have been many studies that show how a HECM or Reverse Mortgage can help with Sequence of Returns Risks and Longevity Risk. I particularly like this article because it describes a coordinated strategy that is simple to implement https://toolsforretirementplanning.com/2016/08/20/sacks-and-lafaye-case-study/ In addition, Jamie Hopkins, Esq., LLM, MBA, CFP, RICP wrote a book titled Rewirement: Rewiring the Way You Think About Retirement! that I highly recommend, along with books and studies by Wade Pfau, Ph.D., CFA.Finally, think of HECMs and Reverse Mortgages as part of the financial planning/ retirement income planning process. They can be part of discussions with your clients about deferring social security, paying for health care and long-term care costs, making home modifications, keeping their current home, or buying a new one. They may offer a useful tool when gray divorce is the challenge, and as mentioned above, they may protect against Sequence of Returns Risks. About Susan A. Pomfret, RICP. Susan was one of the first to originate HECMs in Rhode Island, starting in 1989. She began her mortgage career over 30 years ago. She is a familiar and respected face in the senior community, combining her professional experience with senior volunteer work. She served as Co-Chairperson of the Board of Directors for the Senior Agenda Coalition, Board of Directors member for the RI Chapter of the Alzheimers Association and was Co-Chairperson for Alzheimers annual fundraising auction. Her volunteer work with the National Reverse Mortgage Lenders Association (NRMLA) includes serving as an appointed member of the Government Affairs, State and Local Issues Subcommittee. She has lobbied at the RI State House, participated in many rallies, and testified on various senior bills and issues, both in RI and on Capitol Hill. She was chosen to assist in writing the first Certified Reverse Mortgage Professional (CRMP) test, was a frequent columnist for Senior Digest Newspaper and PrimeTime Magazine, and was a monthly co-host of the Senior Digest Radio Show on WPRO 620AM. Susan has been published in many national mortgage industry publications and was chosen to cover the 2005 White House Conference on Aging (WHCOA), as well as attend the invitation-only 2015 WHCOA Forum in Boston, MA. She co-founded of the RI Chapter of the National Aging in Place Council, is an appointed member of the Aging in Community Act Subcommittee (affiliated with the Lt. Governors Long-Term Care Coordinating Council) and is an appointed Alzheimers Ambassador RI U.S. Representative. Susan holds a Bachelor of Science in Paralegal Studies and Certificate in Gerontology from Roger Williams University and Retirement Income Certified Professional (RICP) Designation from The American College of Financial Services.  *https://www.prnewswire.com/news-releases/senior-housing-wealth-reaches-record-7-70-trillion-301154029. **The servicer will charge a $20 change fee each time they change the payment plan. ***Contact a tax professional.

Susan A. Pomfret RICPAccording to the National Reverse Mortgage Lenders Association (NRMLA), homeowners age 62 and older had housing wealth over $13 trillion. This wealth is not liquid. Its locked up in home equity at a time when older Americans are looking for ways to fund their retirement. Home Equity Conversion Mortgages (HECMs) are one way to unlock this money, and financial planners now consider them an integral part of financial planning for retirement.What Is a HECM? A HECM allows homeowners 62 and older to access a portion of their home equity to use in retirement. Reverse Mortgages are available in certain states for those 55 and older and offer higher loan amounts than HECMs. Retirement Income Planning BasicsA secure retirement income plan should meet your financial goals and address retirement risks. Financial goals may include a source of income, paying for contingencies, and leaving funds for your heirs. Retirement risks may include longevity, inflation, healthcare costs, the need for long term care, the sequence of withdrawal of your funds from your available sources, and changes in public policy. A financial planner can help you develop a plan to address these issues, and a HECM can be an important part of your plan. Ways to Use a HECM in Your Financial Plan The proceeds from a HECM can be used in any way you wish. Once the HECM has paid off your existing mortgage, a financial planner can help you set priorities for the way you spend these funds, such as:                              Fund home renovations to age in place                               Purchase a new home (HECM or Reverse for Purchase)                               Spend home equity first to leverage investable asset growth potential                               Coordinate home equity to mitigate sequence of returns risk                               Use tenure payments to reduce portfolio withdrawals perhaps to keep them at a                               sustainable level (4-6%)                                Use tenure payments as an annuity alternative                                Delay your Social Security                                Manage your tax bracket                                Manage a Roth conversion                                Pay for long-term health care                                Fund end-of-life care                                Protect your homes value                                Create a contingency fundIf you are considering a HECM as part of your retirement plan, its important to remember that the amount you can borrow is determined by the age of the youngest borrower, the interest rate, and the appraised value of the home or maximum claim amount, whichever is less. Also, youre responsible for property taxes and homeowners insurance. Finally, you must continue regular maintenance and make necessary repairs to keep the home in good condition. If you have additional questions about HECMs or Reverse Mortgages, I'm here to help. Call me today for more information about this retirement income option. 401-595-7300.

Susan A. Pomfret RICP There are many misunderstandings about Home Equity Conversion Mortgages (HECMs). Something everyone can agree on is that HECMs offer an avenue for older homeowners to use a portion of the equity in their homes to supplement their income in retirement. You may have heard some other things about HECMs that are misleading. Lets separate fact from fiction. Myth #1: I wont own my home. Fact: Just like a regular mortgage, you keep the title to your home. The lenders interest in your property extends only to the balance of your HECM loan.Myth #2: I wont have anything to leave my children. Fact: The loan is not due until the last borrower dies, moves out, or sells the home. If you pass away, your heirs can either sell the home or refinance it. The HECM lender will receive the amount owed on the loan. In addition, you cannot borrow the full appraised value of your home, and home values have risen steadily in recent years. This creates two ways in which there may be equity for your heirs after the home is sold and the loan is repaid. Please note there is no guarantee that your homes value will stay the same or increase.Myth #3: I cant sell my home. Fact: You can sell your home just as you would if you had a regular mortgage. The HECM will be paid off with the proceeds from the sale, and you will receive the remaining funds.Myth #4: Ill have to pay taxes on the funds I receive from the loan. Fact: Proceeds from a HECM are usually income tax-free, but you should always consult your tax advisor to make sure you understand any tax consequences.Myth #5: I have to pay off my current home loan before I can apply for a HECM. Fact: The HECM will pay off your existing mortgage, and then the funds available to you will be based on the equity in your home and amount the program allows you to borrow.Myth #6: There are restrictions on the way I can use the funds from the loan. Fact: You can use the proceeds from a HECM any way you wish. Your home may well be your greatest asset, and wise use of these funds can give you greater security in retirement.Myth#7: I should only consider a HECM as a last resort. Fact: Rather than considering a HECM as a last-ditch effort to raise retirement funds, financial planners are making it part of comprehensive retirement planning. Uses for HECM funds include paying for long term care, improving cash flow, remodeling your home to allow aging in place, paying off higher interest consumer debt, and delaying the start of Social Security so the monthly benefit amount can grow. If you have additional questions about HECMs or Reverse Mortgages, I'm here to help. Call me today for more information about this retirement income option. 401-595-7300.

A HECM for Purchase allows those 62 and older to purchase a primary residence, there is also a Reverse Mortgage for Purchase product for those 55* and older (*in most states).Borrowers are realizing the benefits of using a HECM for Purchase and how they can improve their retirement and live a more financially stress-free retirement.Home Equity Conversion Mortgage (HECM): What is it? A loan for homeowners 62+. Must apply to the borrowers primary residence. Proceeds available determined by age of the youngest borrower, expected interest rate, and property value (2024 HUD national lending limit: $1,149,825). Must be SFR, 2-4 unit, townhome, or an FHA-approved condo or manufactured home. Borrower is responsible for paying property taxes, insurance, and any other property charges, as well as upkeep of the property. Loan becomes due when borrower sells, no longer maintains the home as a primary residence, or the last remaining borrower passes. Reverse Mortgage Jumbo products are available for higher home values (loan amounts up to $4 million) for homeowners 55* and older. Borrower safeguards Independent HUD counseling is required prior to loan application. Financial assessment is required for loan approval (no FICO score or DTI requirements). Life Expectancy Set-Aside (LESA). Capped interest rates. Full disclosure of costs.ExampleMary (age 75) wants to move and right size to a home that is better suited for her. She currently pays roughly $1500/mo. for her current mortgage.She figures she will net about $375,000 from the sale of the current property and ideally would like to purchase a home outright so she can eliminate the burden of a mortgage payment.Problem! Marys forever dream home that she has fallen in love with is $500,000. So, her real estate agent introduces her to the option of a HECM for Purchase loan.Marys HECM for Purchase option:Purchase price of forever dream home: $500,000.Proceeds from sale: $375,000.HECM for Purchase down payment: $216,966 (assuming buyer is paying all fees).Remaining proceeds from sale: $158,034.Realized funds without HECM for Purchase: $0.Realized funds with HECM for Purchase: $158,034. *For illustration purposes only. 12,000 people that turn 65 each day* 34% of all homeowners are over 60 years old** Is a HECM right for you? Contact me today to learn more at spomfret@usamortgage.com or 401-595-7300.Sources:*https://www.cnbc.com/2017/10/03/health-care-dilemma-10000-boomers-retiring-each-day.html** https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf