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Finance Retirement with A Reverse Mortgage

November 10, 2009
Retirement Financed with Reverse Mortgage

Retirement Financed with Reverse Mortgage

Estate planning, protecting one’s investments, traveling, and supplementing one’s income are desires of retirement   Large monthly payments, high interest rates, foreclosures, home repairs and modifications, and medical expenses can all be issues facing seniors.  A solution for those 62 and older to finance their retirement no matter what their circumstances may be a reverse mortgage.

A loan with no required monthly payments and no income or credit qualifications for the interest rate can provide tax-free cash* for whatever one wants or needs.

Larry and Carol did a reverse mortgage so they could pay off their current mortgage and eliminate the payments.  Not having to make payments, Larry was able to retire, a much awaited and deserved event at the age of 70.  With $45,000 remaining in their line of credit, which grows so more money is available to them in the future, and a good estate plan, they can live comfortably without financial pressures.

Wayne and Barb were having financial problems because of high credit card debt and medical expenses.  Even though they don’t have remaining funds, with their reverse mortgage their cash flow has improved because they don’t have to make the monthly payments.  With a plan and a budget, they thanked us stating, “The reverse mortgage has helped us in our time of need to change our financial situation.  It has made a big difference in our lives.”

Working with an estate planner, a reverse mortgage helped Mary plan her retirement so she has funds for emergencies, medical expenses, traveling, leaving something for her heirs, and enjoying life without being dependent on her children.

A reverse mortgage is a loan similar to a conventional mortgage but with different terms to help seniors remain in their home with security, independence, dignity and control.  The borrowers keep the title to the home and are responsible for taxes, insurance, and maintaining the home.  Unlike a conventional loan the low-interest accrues, increasing the balance with no mortgage payments due until the home is no longer the primary residence of the borrowers.  In addition, the reverse mortgage is a non-recourse loan which means there is no personal liability to the borrowers or their heirs for repayment.  Remaining equity goes to the borrowers or their heirs.

One can have a trust, life estate, or receive Medical Assistance, Elderly Waiver or other public benefits and use the reverse mortgage for estate planning.  Not considered income, Social Security and Medicare are not affected.

It may sound too good to be true, however, it is a safe way to access cash for retirement and remain in your home as long as you choose.

Enjoying Retirment with His Reverse Mortgage

Enjoying Retirement with His Reverse Mortgage

As Myrna stated, “It is really great not to have to be concerned about where the money will come from for my long term care insurance policy payment and emergency repairs.  It has relieved us of a great deal of stress and makes grocery shopping a lot easier too.”  Reverse mortgages have helped many finance their retirement, how can it help you?

For more uses of the reverse mortgage, read Know A Senior Who Wants Security, Independence, Dignity and Control? A Reverse Mortgage May Be The Answer! and Reverse Mortgages Answer Prayers

*consult your tax advisor

© 2009-2014 Beth Paterson http://BethsReverseMortgageBlog.wordpress.com 651-762-9648

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53 Comments leave one →
  1. November 11, 2009 4:33 pm

    “One can have a trust, life estate, or receive Medical Assistance, Elderly Waiver or other public benefits ”
    Actually, this statement is slightly incorrect.
    1. if the RM is taken as monthly income, then it is IN FACT considered income and will disqualify the senior for income tested programs.
    2. once the loan is in place and if the senior has to go to a nursing home, Medicaid WILL recover on the exposed equity.

    In the Wayne and Barb example, I would bet that their income was low. And they had no assets except the house. Afterall 80% of all seniors have less that $1500 a month of hard income.
    I would also bet that the would have be eligible for QMB or SLB help on their Medicare (zero premiums, elimination of some co-pays) and probably “extra help” from Part D RX. (eliminates donut hole, $1 and 3 rxs)

    Taking the RM was a very expensive bandaid on a broken arm. They now have paid $7-14k in fees, to use up their equity paying for things that programs are in place to pay for. Medical expenses dont go away as you get older.

    I would estimate that 40% of all RM are inappropriate as a first step.
    I was a speaker at the RM National Convention in San Fran several years ago. The RM agents sat there dumbfounded at the information I provided. Like most product sales people in the Senior Industry, their version of “government programs” is limited to MYTHS about medicaid/medi-cal and nursing homes. FACT: in CA out of 4 million seniors, 1.6 million qualify for the level 1 and 2 of ‘extra help’ from Medicare Part D. This mean that they have income under 1200 a month. That is information provided by the Government.
    (not a marketing group) Yet less than 50% are signed up.

    The solution to ‘high medical bills’ is not a RM. It is being signed up for ALL the proper government programs designed to cover those costs.
    Then and only then should a RM be concidered.

    • November 17, 2009 1:36 pm

      Mark, YOU are incorrect. The reverse mortgage is not considered income therefore does not affect government benefits even if taken as monthly payments as long as the reverse mortgage funds are spent in the month they are received. If received in a lump sum and or monthly and not spent in the month receive they could affect receiving Medicaid and/or public benefits. I keep the MN statute that states this convenient for anyone who states otherwise.

      The reverse mortgage is in first lien position so the lender is repaid first then the state may recover the expenses they have covered – it will depend on the laws of the state however.

      As far as other options that may be available, we as well as the counselors (required by everyone doing a reverse mortgage) discuss options. We also encourage our borrowers to talk with elder law attorneys or social workers to learn about options they may be qualified for. While all lenders may not do this, the counselors do discuss options with them.

      Closing costs are comparative to other loans. Please ready my Blog, “Reverse Mortgage Closing Costs – High or Mythical?” The difference is the FHA mortgage insurance and borrowers receive many benefits by having FHA insure the loan (outlined in the Blog article). Seniors often had taken (although most do not qualify now) conventional loans, using the equity in their home for their needs but having to make payments. Then when “life happens” they have to decide whether to pay the mortgage or other expenses such as medical bills – this can cause a hardship for them.

      Reverse mortgage funds can cover needs beyond medical expenses or what government programs cover. With the reverse mortgage they can have peace of mind, as well as security, independence, dignity, and control.

      While at the reverse mortgage convention maybe you should have listened and learned more about reverse mortgages and how they can work hand in hand with other programs. You should also read my Blog article, “Is Your Opinion of Reverse Mortgages Denying Seniors?”

      Yes, seniors should learn and explore what programs they may qualify. Many don’t necessarily qualify for the government programs and/or don’t want to rely on the government programs but want to do the reverse mortgage to have choices and control and not be limited by what the government program cover.

      The reverse mortgage should be considered along with other options. Seniors should receive the facts about reverse mortgages then they can decide what is right for their situation.

  2. November 17, 2009 2:36 am

    Being a financial advisor for over 20 years and currently, for the past 6 years, a Seniors Real Estate Specialist (SRES), I couldn’t agree more with the use of this product. I feel that the Baby Boomers will come into their own with the use of the Reverse Mortage and Reverse to Purchase Mortgage. The boomers will be less affluent than their parents and will find these vehicles invaluable to their financial health. It is imperative that financial advisors and planners get on board with the use of this product for the betterment of their clientele.

Trackbacks

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  35. Think you don’t need a reverse mortgage? Think again… Maybe you’ll WANT one. | Minnesota Reverse Mortgages SIDAC
  36. Reverse Mortgage Stories To Warm The Heart | Minnesota Reverse Mortgages SIDAC
  37. Respect for Oneself Increases With A Reverse Mortgage | Minnesota Reverse Mortgages SIDAC
  38. Reverse Mortgages Give Reasons For Hope | Minnesota Reverse Mortgages SIDAC
  39. Reverse Mortgage Allowed Creation of Memories for Family | Minnesota Reverse Mortgages SIDAC
  40. I’m In The Reverse Mortgage Industry Because… | Minnesota Reverse Mortgages SIDAC
  41. “Our Reverse Mortgage Is Great. Gives Us Some Elbow Room.” And More Testimonies by Reverse Mortgage Borrowers | Minnesota Reverse Mortgages SIDAC
  42. Memories Created for Reverse Mortgage Heirs | Minnesota Reverse Mortgages SIDAC
  43. How Do Reverse Mortgages Compare to Conventional Mortgages? | Minnesota Reverse Mortgages SIDAC
  44. A Minnesota Reverse Mortgage Borrower Speaks Out On The Benefits With Her Reverse Mortgage | Minnesota Reverse Mortgages SIDAC
  45. Using The Reverse Mortgage As A Tool To Strategically Manage One’s Assets | Minnesota Reverse Mortgages SIDAC
  46. Basics of Reverse Mortgages – On The Radio | Minnesota Reverse Mortgages SIDAC
  47. The Impact Of A Reverse Mortgage On A Community Spouse | Minnesota Reverse Mortgages SIDAC
  48. They’ll Say Anything To Get A Reverse Mortgage Application | Minnesota Reverse Mortgages SIDAC
  49. FHA Lending Limit for Reverse Mortgages Extended | Minnesota Reverse Mortgages SIDAC
  50. Reverse Mortgage Protects Retirement Plan | Minnesota Reverse Mortgages SIDAC

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