Reverse mortgages are very popular financial tool available to people over the age of 62. This special type of mortgage allows homeowners to access some of their home equity, but unlike a home equity loan there are no monthly payments. The financial institution recoups the amount of money they gave you plus interest when the home is sold after the owner dies.
Whenever you enter into a financial contract involving your home you should always hire competent counsel to help you wade through the details. Some elderly homeowners have had a shock to find that the mortgage that they took out was much more expensive than they thought. Unscrupulous mortgage sales people sometimes direct seniors into contracts that put the home at risk.
The older you are the more cash you can tap out of your home equity through reverse mortgage. A single individual can get out more money than a married couple because the odds of a single person dying sooner than later are greater than a couple’s chances of dying. They’re been cases where mortgage reps have convinced married couples to sign off on the home equity loan under one name only in order for a bigger mortgage to be granted. The trouble is that the remaining spouse gives up all rights to the home they can actually be a bit should be mortgagee die prior to them.
In recent years reverse mortgages have come under greater scrutiny. Too many senior citizens have been exploited and some have actually lost their homes. When the surviving children of the elderly homeowner go to settle the estate they sometimes find that the family homestead is no longer in the family. The family elder has tapped into the homes of equity and pilfered away the assets.
This isn’t to say that reverse mortgages aren’t useful and helpful financial instruments. They can be. Many elderly folks who are faced with growing expenses have little alternative ways of generating income. By tapping into the home equity they can pay off medical bills and other expenses like putting a new roof on the house without burdening themselves with higher monthly expenses.
Before entering into one of these contracts consider all your options. While it may be emotionally difficult to do, selling the home and moving into a smaller apartment is often a very practical alternative. As always, sitting down with a certified public accountant and estate planning attorney before making these kinds of big moves will pay dividends.
It’s vitally important that all paperwork concerning a reverse mortgage are properly filed with any outstanding mortgage holders. Some elderly people have been ripped off by mortgage companies that have tapped into their home equity and pocketed a good portion of the proceeds. That’s where an expert CPA can help you protect yourself or your parents from fraud. If you’re not able to follow up on these detailed matters that it’s critical that you hire someone that who can.
Another alternative to a reverse mortgage is what’s termed a “property tax deferral” loan that is available from some local government agencies. But not available in every state and locality. The proceeds from these loans can sometimes be put towards paying down outstanding property taxes. It’s a way for senior citizen to get current on their property taxes without the risk of foreclosure. Just like a reverse mortgage the homeowner does not have to maintain monthly payments and the county or state gets the proceeds of the home sale upon the death of the homeowner.
One important stipulation, reverse mortgage is the fact that the home in question has to be a primary residence and that the owner of the house must live in the home. The house must be kept up to code, insurance has to be maintained and property taxes must be current.
Keeping your elderly parent or grandparent at home and safe is a concern that many people face. For more information on senior safety and ways that you can help an elderly loved better, please visit our friends at ElderKind.com. ElderKind offers senior care product reviews and information you need to better care for the elderly.
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