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Are You
Eligible?
A Reverse Mortgage is not right for
everyone. However, if its right for you, why not take
advantage of it? You can qualify for a Reverse Mortgage based
simply on the value of your home and your age. The amount of
cash you can get also depends on the specific Reverse Mortgage plan
or program you select and qualify for. The differences in
available loan amounts can vary greatly from one plan to another.
All borrowers must be at least 62 years
of age for most Reverse Mortgages. Owners generally must occupy the
home as a principal residence (where they live the majority of the
year).
How Do They Work?
With a Reverse Mortgage you typically
do not have to make any payments for as long as you live in your
home. A Reverse Mortgage must be repaid in full when the last
living borrower dies, sells the home, or permanently moves away.
Since you make no monthly payments
while you are living in your home, the amount you owe increases over
time. But you will never owe more than your home's value at
the time the loan is repaid.
Typically, a Reverse Mortgage borrower
keeps the loan until he or she passes away. This means that
your children will have to repay the loan. This will qualify
as a debt against your estate for estate tax purposes. This
will also qualify as a debt against your estate for Medicaid
purposes. And, since you receive the cash now, you will be
able to properly invest it now for the benefit of your children.
Don't leave your home to your children at your death with the hope
that they will sell it for profit. Set up their benefit now
and protect that benefit with the cash you get from your Reverse
Mortgage.
What Do You Get?
The cash from the Reverse Mortgage can
be paid to you in a single lump sum. Or, if properly invested,
can be paid to you in regular monthly payments. Or, deposit
the cash as a credit line that lets you decide how much cash to use
and when to use it. Or, with the proper guidance, you may
choose any combination of these payment plans.
Be careful though....Some Reverse
Mortgages are offered by state and local governments and may only be
used for specific purposes, such as paying for home repairs or
property taxes. Many times your mortgage broker or bank will
not tell you this.
What Do You
Pay?
Each Reverse Mortgage plan comes with
certain costs and expenses. Again, mortgage brokers and banks
don't always tell you these costs up front. With an attorney
on your side, you will know each of these costs in advance and will
be able to make the best decision for you.
Many times these costs and expenses can
be paid from the loan proceeds. So, if right for you, you may
not be out-of-pocket for any of these costs.
Taxes, Estates, and Public Benefits
Reverse Mortgages may have tax
consequences, affect eligibility for assistance under Federal and
State programs, and may have an impact on the estate and heirs of
the borrower. However, with our guidance, we should be able to
reduce, if not eliminate, these consequences.
There are certain IRS rules that govern
Reverse Mortgage loan advances. There are also certain
Medicaid rules that include Reverse Mortgage loan advances as
"available resources". Don't pay outrageous estate taxes or become
disqualified for Medicaid simply because you did not get the benefit
of proper legal advice.
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