| I talk to senior homeowners every day who have | | | | The CONS of Reverse Mortgages: |
| tons of questions about the efficacy of Reverse | | | | A Reverse Mortgage has all the typical closing |
| Mortgages. "Is this a good idea for me?" "Will I | | | | costs one finds with a typical mortgage. However, |
| lose my home?" "Now the bank will be on the title | | | | they can be more costly. There is FHA mortgage |
| of my property, not me, right?" These are | | | | insurance and additional closing costs. But the |
| legitimate questions. Many things in life have | | | | costs are still typical of an FHA mortgage. |
| advantages and disadvantages. Reverse | | | | A Reverse Mortgage can reduce your |
| Mortgages are no different. So here are some | | | | children's and grandchildren's inheritance. A |
| things that may help you if you're looking for | | | | Reverse Mortgage is a rising debt loan since no |
| information on Reverse Mortgages: | | | | mortgage payments are being made. It is the |
| The PROS of Reverse Mortgages: (also called | | | | opposite of a typical mortgage where equity |
| senior mortgages) | | | | increases as mortgage payments are made. |
| Tax free income guaranteed by the Federal | | | | Selling your home can often provide a |
| Government which continues as long as your | | | | greater return on your investment than a |
| home is your primary residence. | | | | Reverse Mortgage. |
| You can change your plan at any time from | | | | Moving from your residence in less than five |
| a line of credit, cash out, monthly checks, or a | | | | years makes a Reverse Mortgage impractical. It |
| combination (depending on what remains). | | | | does not make good sense to use a Reverse |
| The remaining Line of credit grows each | | | | Mortgage short term. |
| month at half percent over the current interest | | | | If you fail to pay your real estate taxes or |
| rate. | | | | homeowner's insurance or neglect to maintain |
| Unlike an equity loan there is no income, | | | | your home, the lender may require repayment of |
| credit, or health qualification. | | | | the debt. (Lenders, however, will work with you |
| A good option for seniors who wish to | | | | to cure the default.) |
| remain in familiar surroundings and in the same | | | | If you leave your primary residence for a |
| community where they've lived for years. | | | | period exceeding 12 consecutive months, the |
| Moving can cause emotional turmoil for many | | | | Reverse Mortgage will become due. (Nursing |
| senior homeowners; memories were made in | | | | homes, assisted living, etc.) |
| your "home sweet home". Proximity to love ones | | | | If your heirs wish to benefit from your home |
| and remaining in community may seem a better | | | | after your passing, they can sell the property and |
| option. | | | | keep the remaining equity or they can get their |
| Reverse Mortgages can satisfy your existing | | | | own mortgage. However, in keeping the home |
| mortgage or debts, though your debts are | | | | the full balance will be due. |
| transferred to your Reverse Mortgage balance. | | | | Medicaid may be affected, and you may not |
| (Your home does not have to be free and clear | | | | qualify for benefits unless you spend down your |
| to qualify.) | | | | Reverse Mortgage proceeds each and every |
| There are no out of pocket costs other than | | | | month. (Check with your attorney and Medicaid to |
| the appraisal fee and HUD counseling. Some HUD | | | | discuss Medicaid's parameters.) |
| counseling organizations do not charge a fee | | | | When NOT to get a Reverse Mortgage: |
| depending on which HUD counseling agency you | | | | An equity loan may be a cheaper way of |
| choose. | | | | getting cash out of your home as closing costs |
| You can remain in your home no matter | | | | are lower. |
| what is owed the lender. You can never be | | | | If your primary goal is fixing up your home |
| forced out of your home as long as your real | | | | and a community loan is adequate, a Reverse |
| estate taxes and homeowner's insurance are paid | | | | Mortgage is not your best option. |
| and as long as you maintain your home. | | | | If you are ill and assisted living or a nursing |
| You can refinance your Reverse Mortgage | | | | home is imminent, do not choose a Reverse |
| over and over again as long as there is equity in | | | | Mortgage. |
| your home. | | | | If your financial situation precludes you from |
| Upon the sale of your property you can | | | | keeping up maintenance, taxes, or insurance on |
| never owe more than the home is worth. | | | | your home, forego getting a senior mortgage. |
| However, if you choose to pay off your debt and | | | | When family members or trusted advisors |
| live in your home or if your heirs decide to pay | | | | suggest that a senior Mortgage is not a good |
| the debt upon your passing and retain the home, | | | | option, consider their suggestions and keep an |
| repayment of the full mortgage debt will be due. | | | | open mind as they have your best interests at |
| Your assets cannot be attached to repay the | | | | heart. |
| mortgage debt, and the debt does not pass to | | | | If your children invite you to move in with |
| your heirs or your estate. The home stands for | | | | them, this may be the perfect alternative to |
| the debt. | | | | staying in your own home. |
| Reverse Mortgages have many safeguards: | | | | A homeowner whose residence utilizes more |
| capped interest rates, a limitation on fees, HUD | | | | than 25% of the total living space will not qualify |
| counseling, asset protection (non-recourse loan), | | | | for an FHA Reverse Mortgage. Don't waste time |
| no maturity date (cannot become due during a | | | | trying to get approved. |
| borrower's lifetime). | | | | Keeping an open mind about senior mortgages is |
| Can be a financial tool to help heirs avoid | | | | a must. Erroneous statements have shown up in |
| some of the real estate tax. | | | | print scaring away senior homeowners who would |
| Your heirs may be able to claim the interest | | | | have benefited greatly from this wonderful |
| from your mortgage on their income taxes after | | | | program. Be careful about accepting information |
| your passing. (Be sure to consult your tax | | | | from those who are not experts in the field. If |
| advisor.) | | | | you've got questions, contact your local Office |
| Now, those are the pros. Pretty easy, right? Sure, | | | | For the Aging or log onto HUD.gov and look for a |
| the dutiful old loan officer always gives you the | | | | Reverse Mortgage counselor. The counseling is |
| good parts! But there are some things you need | | | | free! Also, feel free to call me any time from 9 |
| to know that some may feel are drawbacks to | | | | am to 10 pm seven days a week. I am here to |
| Reverse Mortgages. So here are the cons: | | | | help. |