Hi Pinnacle, Your HomeActions News for Monday, October 01, 2018
Is this email not displaying correctly?
View it in your browser .
Pinnacle Residential Properties
Pinnacle Residential Properties
(781) 237-5000
info@pinnaclehouses.com
555 Washington St.
Wellesley, MA 02482
Friend Me on Facebook Follow Me on Twitter
Our Website
Featured Listings
Our Agents
Property Search
Pinnacle Mobile App
What is my Home worth
Share Save

What's the Deal With Reverse Mortgages?

 

You've seen the television commercials. A well-known actor sings the praises of reverse mortgages and promises fast debt relief if you agree to one. But what is a reverse mortgage? Do you qualify for one? When should homeowners consider a reverse mortgage?

What Is a Reverse Mortgage?

A reverse mortgage is a loan available to homeowners who are age 62 or older. A lender agrees to pay you an amount each month based on a portion of the equity in your home. Each month, you receive a payment based on this amount. As long as the borrower remains in the home, the loan doesn't have to be repaid. However, when the borrower moves from the home, the loan must be repaid. Typically, the home is sold and the proceeds repay the loan.

Who Might Benefit From a Reverse Mortgage? 

Reverse mortgages are available to people age 62 and older for a reason: Many of them face high medical bills. Some people facing terminal or chronic illnesses have only the equity in their homes as their primary asset. For these people, a reverse mortgage may provide the cash needed to pay outstanding medical bills — while letting them remain in their homes.

Reverse mortgage payments, according to the Federal Trade Commission, typically do not affect Social Security or Medicare coverage. You can still receive both even if you are tapping into a loan based on your home's equity.

What Are the Drawbacks of Reverse Mortgages?

Banks need to make money off of the transaction, so they charge fees and interest for reverse mortgages. These fees are added to the loan amount. Consequently, when the final repayment is due, it may be considerable. Additionally, the interest rate is often variable instead of fixed. Over time, rising interest rates may add greatly to the cost of a reverse mortgage.

Because you'll still own the title to your home, you're responsible for its upkeep and maintenance. Bills for repairs must be paid and the home must be kept in good condition to satisfy the loan.

How Does a Reverse Mortgage Impact Estate Planning?

When the borrower dies, some reverse mortgages allow the surviving spouse to remain in the property without penalty. Others do not. It's important to check the fine print to make sure your spouse isn't going to be left homeless after you pass away.

If you're single, divorced or widowed, your estate must repay the entire cost of the loan, including the accumulated interest. Usually, the home must be sold to cover these costs. If you are hoping to leave your home to someone, a reverse mortgage may make that impossible.

There are several types of reverse mortgages, each with its own rules and requirements. Be sure to read everything in the documents presented to you by the lender and discuss the situation with your spouse and a financial professional. Reverse mortgages offer financial relief to some and nightmares to others. Also, rules and options are always changing, so consult with a financial professional before making a decision.

 
Share Save

Your Comments

Saved Articles
Comments and Feedback
Refer A Friend
Your Privacy
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
Powered by
Copyright © HomeActions, LLC All rights reserved.

This email was sent to: info@pinnaclehouses.com

Mailing address: Pinnacle Residential Properties, 555 Washington St., Wellesley, MA 02482