Reverse Insider | March 2022

Reverse Insider | March 2022

Y E A R 2 | V O L 3 | M A R C H 2 0 2 2 REVERSE Insider I id R E V E R S E M O R T G A G E F U N D I N G N E W S L E T T E R

MARCH IS NATIONAL CREDIT EDUCATION MONTH

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Whether you ’ re st i l l in the workforce or newl y ret i red, you don ’ t want your credi t rat ing to take a hi t . March i s Nat ional Credi t Educat ion Month, and i t ’ s a great t ime to turn the focus on your credi t heal th, and how to establ i sh and maintain good credi t for years to come. F inanc ing a car , mak ing a balance t ransfer or ref inanc ing your mor tgage al l take your credi t score into cons iderat ion. A st rong score wi l l al so make i t eas ier (and could gi ve you a bet ter interest rate) i f you need to take out a personal loan to pay for l i fe ’ s unexpected expenses . RETIREMENT IS LIFE- CHANGING. BUT ONE THING IT SHOULDN’T CHANGE? YOUR CREDIT SCORE.

Recommend changing thi s to “and could gi ve you…” as there are other factors that are cons idered.

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But even if your credit situation is not where it needs to be, you may still be eligible for a reverse mortgage.

A reverse mortgage is a type of loan available to older homeowners, allowing you to borrow against the equity in your home. This provides funds that you can use today, or a line of credit that’ll be there when you need it — all while you continue to live in and own your home. Whether you want to use the funds to pay off old debt, cover medical costs, make home renovations or simply to supplement your retirement income, the choice is yours. Just like any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance, maintenance.

REVERSE INSIDER

PREPARING FOR RETIREMENT? DON’T FORGET TO PREPARE YOUR CREDIT FOR THE NEXT PHASE, TOO.

Don’ t close accounts . Whi le i t ’ s t rue you can ’ t rack up credi t card debt wi thout credi t cards , c los ing your accounts can do more harm than good. Your credi t hi story accounts for about 15% of your credi t score. So i f you want to cont inue to improve your credi t hi story , keep the card open and cont inue bui lding i t . Open addi t ional accounts . Yes , you read that correct l y . When you don ’ t have a lot of credi t , opening a new credi t card can help boost your score. Wi thin s i x months of opening an account , you may star t to see your credi t score go up — as long as you ’ re maintaining i t and stay ing in good standing. Be mindful of not opening more accounts than you need. Is a reverse mortgage r ight for you? I f you have s igni f i cant debt that can sabotage your ret i rement sav ings , cons ider the benef i ts of a reverse mor tgage loan.

Did you know that consumers in thei r 50s have the highest level s of credi t card debt ? Wi th onl y a decade or so lef t unt i l ret i rement age, thi s age group owes about $213.2 bi l l ion to credi tors .

Par t of ret i rement readiness i s managing debt on a f i xed income.

Here are some steps to help get your credi t card debt in check :

Keep balances low. I f your credi t cards are near the credi t l imi t , thi s rai ses red f lags to credi tors , s ignal ing that you may be carry ing too much debt . Set sensible spending l imi ts . To help maintain manageable monthl y payments , use your cards st rategi cal l y . Maybe one card i s used exc lus i vel y for gas or grocer ies , whi le another i s st r i ct l y for dining out . However you use them, i t ’ s impor tant to avoid overspending. Consol idate debt . Interest rates di f fer , depending on the credi t card. I f you have accumulated s igni f i cant debt , cons ider consol idat ing i t onto the card wi th the best rate. By cut t ing down on interest payments , you ’ l l ul t imatel y pay less over t ime.

REVERSE INSIDER

5 RED FLAGS THAT YOUR CREDIT SCORE IS IN HOT WATER

You’ re making late payments . Thi r ty- f i ve percent of your credi t score i s your payment hi story . Cons i stent l y being late on those payments wi l l hur t your score, even i f i t ’ s just by a few days . Pay your credi t card bi l l s on t ime, every t ime to preserve your good credi t . You’ re not making payments at al l . Worse than pay ing late i s not pay ing at al l . For each month you mi ss a payment , you ’ re one month c loser to hav ing the account charged of f . That means your account i s c losed for good and your debt wr i t ten of f as a loss — but the damage remains on your credi t repor t . You closed out old cards . F i f teen percent of your credi t score i s your credi t hi story . Clos ing cards could shor ten your hi story , whi ch can leave a ding on your credi t rat ing. What i f there was a f inanc ial tool wi th less credi t requi rements than some other opt ions? There i s , and i t ’ s cal led a reverse mor tgage loan.

A couple of mi ssed payments here, a few high balances there — i t ’ s relat i vel y easy to ruin your credi t score. And whi le i t can take a lot of t ime to undo the damage, i t ’ s always wor th i t . Your credi t score i s a cr i t i cal component of your f inanc ial heal th. I f your score i s unat t ract i ve to lenders , the fol lowing might explain why : You’ re gett ing cal ls from col lect ions . I t ’ s never a good s ign when thi rd-par ty debt col lectors are af ter you for payment . Accounts are usual l y sent to col lect ions when your credi tor has gi ven up. And the longer you wai t to pay up, the more fees and interest you ’ l l accrue, in addi t ion to sabotaging your credi t . You’ re carrying high balances . Ideal l y , you want to pay the balance in ful l every month. When that ’ s not poss ible, you want to keep your credi t ut i l i zat ion low by charging no more than 30% of your total credi t l imi t at a t ime.

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5 FINANCIAL BEHAVIORS TO IMPROVE A LOW CREDIT SCORE

Why i s your credi t score so impor tant ? I t ’ s more than an arbi t rary number . I t ’ s an indi cat ion that your f inances are heal thy .

Review your credi t report . You may recei ve one f ree copy of your credi t repor t every 12 months f rom each of the nat ionwide credi t repor t ing companies — Exper ian, Equi fax or TransUnion. Not onl y wi l l they reveal your score so you know where you stand, but they al so show any di screpanc ies , whi ch can help you detect f raudulent act i v i ty . You may al so use credi t serv i ces to recei ve automated emai l s every t ime there ’ s a change to your score. To determine your credi t score, algor i thms cal led scor ing model s anal yze your credi t repor t . Credi t scores range f rom 300 to 850, but a number in the mid-600s or higher i s general l y cons idered a good rat ing. The higher the score, the more l i kel y you are to make cons i stent payments . The lower the score, the r i sk ier i t i s for credi tors to do bus iness wi th you, whi ch can mean higher interest rates . I f your credi t score i s not the best , t ry these t ips to get star ted on the road to improvement :

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Pay on t ime cons i stent ly . One l ate payment can lower your score by tens of points . Mi ss ing a payment ent i re l y can be even more severe . Your best bet i s to pay ba l ances in ful l and on t ime . I f you must carry a ba l ance , set up a recurr ing payment onl ine , to ensure t ime l y payment . Keep ba l ances low and manageable . A good rul e of thumb i s stay ing wi thin 30% of the credi t that ’ s ava i l abl e to you , so you never get c lose to the max-out l imi t . For exampl e , i f your credi t l imi t i s $20 , 000 , don ’ t charge more than $6 , 000 . Ma inta in act ive accounts . I f you ’ re not f requent l y us ing a credi t card , i t works to your advantage to keep i t open — and keep i t act i ve . Even sma l l purchases that are pa id on t ime can he lp improve your score . On the other hand , c los ing cards can af fect your overa l l credi t hi story and br ing your score down . Avoid f i l ing for bankruptcy i f at a l l poss ible . Bankruptcy can do ma jor damage to your credi t , rema ining on your credi t repor t for seven to ten years . That ’ l l be ref l ected in your score , too . From debt consol idat ion to debt set t l ement , do your homework and cons ider other opt ions f i rst . ‡

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5 REASONS WHY A REVERSE MORTGAGE LOAN IS NOT A LAST RESORT

I f you ’ re an older homeowner wi th good credi t , should you cons ider a reverse mor tgage?

Reverse mor tgages have long been v iewed through a negat i ve lens — an opt ion for older homeowners who have run out of other opt ions . In fact , they can of fer ret i rees numerous benef i ts as a smar t f inanc ial planning tool . As wi th any f inanc ial commi tment , i t requi res careful cons iderat ion and educat ion to ensure i t ’ s the r ight dec i s ion for your s i tuat ion.

Here are f i ve reasons to do your homework before di smi ss ing the idea of a reverse mor tgage too qui ck l y :

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1. I t provides f inancial wiggle room. Wi th substant ial equi ty al ready bui l t up in your home, a reverse mor tgage loan can prov ide the ext ra funds and f lex ibi l i ty to l i ve comfor tabl y dur ing ret i rement . From home renovat ions to increased safety and comfor t to s impl y hav ing a l ine of credi t at your di sposal , thi s type of loan prov ides a f inanc ial safety net for whatever your purposes may be. 2. Let your home work for you. For those wi thout pens ions or adequate ret i rement sav ings , your reverse mor tgage proceeds can be a v iable opt ion for unexpected expenses such as heal thcare costs . You worked hard to purchase your home and now you can make i t work for you. 3. I t increases the chances of not out l iving your savings . Tak ing out a reverse mor tgage l ine of credi t dur ing your ear l y ret i rement years can al low other investments such as stocks , bonds or IRAs to cont inue earning compound interest . ‡

4. I t can delay the necessi ty to col lect Social Secur i ty. Did you know that your annual Soc ial Secur i ty benef i ts increase eight percent for every 12 months that you delay f rom ages 62 to 70? By borrowing against the equi ty in your home, you can make sure you have the funds you need for everyday l i fe before tapping into soc ial secur i ty . 5. I t ’ s a sol id back-up plan. Even i f you don ’ t need funds now, you never know what the future may br ing. Hav ing a reverse mor tgage l ine of credi t on the backburner means i t ' s there when you need i t . And i f the market i s underper forming and you ’ re worr ied about your investments , you can leverage your home equi ty rather than l iquidat ing your assets .

Ready for Next Month's Reverse Insider? You can expect to find it in your email inbox in early April. Thank You for Reading!

† Thi s mater ial has not been rev iewed, approved, or i ssued by HUD, FHA, or any government agency . The company i s not af f i l iated wi th or act ing on behal f of or at the di rect ion of HUD/FHA or any other government agency . Borrowers who elect a f i xed rate loan wi l l recei ve a s ingle di sbursement lump sum payment . Other payment opt ions are avai lable onl y for adjustable rate mor tgages . As wi th any mor tgage, you must meet your loan obl igat ions , keeping current wi th proper ty taxes , insurance, and maintenance. ‡

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Ch a r g e s s u c h a s a n o r i g i n a t i on f e e , mo r t g a g e i n s u r a n c e p r em i ums , c l o s i n g c o s t s a nd / o r s e r v i c i n g f e e s , i f a pp l i c a b l e , ma y b e a s s e s s e d a nd w i l l b e a dd e d t o t h e l o a n b a l a n c e . A s l on g a s y ou c omp l y w i t h t h e t e rms o f t h e l o a n , y ou r e t a i n t i t l e un t i l y ou s e l l o r t r a n s f e r t h e p r op e r t y , a nd , t h e r e f o r e , y ou a r e r e s pon s i b l e f o r p a y i n g p r op e r t y t a x e s , i n s u r a n c e a nd ma i n t e n a n c e . F a i l i n g t o p a y t h e s e amoun t s ma y c a u s e t h e l o a n t o b e c ome i mme d i a t e l y du e a nd / o r s ub j e c t t h e p r op e r t y t o a t a x l i e n , o t h e r e n c umb r a n c e o r f o r e c l o s u r e . T h e l o a n b a l a n c e g r ows o v e r t i me , a nd i n t e r e s t i s a dd e d t o t h a t b a l a n c e . I n t e r e s t on a r e v e r s e mo r t g a g e i s no t d e du c t i b l e f r om y ou r i n c ome t a x un t i l y ou r e p a y a l l o r p a r t o f t h e i n t e r e s t on t h e l o a n . A l t hou g h t h e l o a n i s non - r e c ou r s e , a t t h e ma t u r i t y o f t h e l o a n , t h e l e nd e r w i l l h a v e a c l a i m a g a i n s t y ou r p r op e r t y a nd y ou o r y ou r h e i r s ma y n e e d t o s e l l t h e p r op e r t y i n o r d e r t o r e p a y t h e l o a n , o r u s e o t h e r a s s e t s t o r e p a y t h e l o a n i n o r d e r t o r e t a i n t h e p r op e r t y . ©2 0 2 2 R e v e r s e Mo r t g a g e F und i n g L L C , 1 4 5 5 B r o a d S t r e e t , 2 nd F l oo r , B l oomf i e l d , N J 0 7 0 0 3 , 1 - 8 8 8 - 4 9 4 - 0 8 8 2 . Comp a n y NML S I D : #1 0 1 9 9 4 1 . F o r l i c e n s i n g i n f o rma t i on , g o t o : www . nm l s c on s ume r a c c e s s . o r g . A r i z on a Mo r t g a g e Ba n k e r L i c e n s e #0 9 2 7 6 8 2 ; L i c e n s e d b y t h e De p a r tme n t o f F i n a n c i a l P r o t e c t i on a nd I nno v a t i on und e r t h e C a l i f o r n i a R e s i d e n t i a l Mo r t g a g e L e nd i n g A c t ; L o a n s ma d e o r a r r a n g e d pu r s u a n t t o a C a l i f o r n i a F i n a n c i n g L aw l i c e n s e ; Ge o r g i a Mo r t g a g e L e nd e r L i c e n s e e #3 6 7 9 3 ; Ma s s a c hu s e t t s Mo r t g a g e L e nd e r L i c e n s e #ML 1 0 1 9 9 4 1 ; L i c e n s e d b y t h e New J e r s e y De p a r tme n t o f Ba n k i n g & I n s u r a n c e ; L i c e n s e d Mo r t g a g e Ba n k e r - NY S De p a r tme n t o f F i n a n c i a l S e r v i c e s - i n - s t a t e b r a n c h a dd r e s s 7 0 0 Co r po r a t e B l v d , Newbu r g h , NY 1 2 5 5 0 ; Rhod e I s l a nd L i c e n s e d L e nd e r . F o r C a l i f o r n i a c on s ume r s : F o r i n f o rma t i on a bou t ou r p r i v a c y p r a c t i c e s , p l e a s e v i s i t h t t p s : / / www . r e v e r s e f und i n g . c om/ p r i v a c y . No t a l l p r odu c t s a nd op t i on s a r e a v a i l a b l e i n a l l s t a t e s . T e rms s ub j e c t t o c h a n g e w i t hou t no t i c e . C e r t a i n c ond i t i on s a nd f e e s a pp l y . T h i s i s no t a l o a n c omm i tme n t . A l l l o a n s s ub j e c t t o a pp r o v a l .