Topics
- Introduction
- Quick Facts About Reverse Mortgages
- Road to Ruin or the Next Big Thing?
- "So What's the Catch?"
1 - Introduction
An important element in our company mission is empowering our clients to play an
active role in creating their financial future. We achieve this by providing education
on important financial topics.
2 - Quick Facts About Reverse Mortgages
Quick Facts on Reverse Mortgages
- Reverse mortgages are based on appraised home value and actuarial estimates, not
credit scores or income levels
- Borrowers are still liable for taxes and other obligations on the property.
- The borrower's estate can never owe more than the value of the home, even if the
eventual sale price is below the value used for the loan
- Not every type of home will qualify as collateral for a reverse mortgage
- Decisions regarding reverse mortgages must include estate planning implications!
- The lender does not take title to the home, and cannot automatically seize the home
if the loan proceeds are exhausted
- Reverse mortgage proceeds have no effect on Social Security or Medicare eligibility
or benefit levels
- It takes approximately 35-45 days to complete and close a typical application after
mandatory training is completed
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3 - Reverse Mortgages - Road to Ruin or the Next Big Thing?
Homeowners today, particularly seniors, are being bombarded by advertisements that
either a) herald reverse mortgages as the best thing since sliced bread; or b) revile
them as a recipe for disaster. Like most things in life, the truth lies somewhere
in the middle, and is dependent upon individual circumstances.
At Lentegra, we recognize that reverse mortgages, like any financial product, are
appropriate in some (but not all) cases. Our consultants are trained to ask the
right questions before identifying any solutions. Your consultant will provide a
basic understanding of reverse mortgages, the advantages and disadvantages. Based
on your specific situation, the consultant can help determine whether a reverse
mortgage is right for them or a loved one.
People today are living longer. For some older homeowners, a reverse mortgage can
provide cash to augment retirement income and enable more fulfilling lives! Proceeds
come in a lump sum payment, a regular stream of payments, or a combination of the
two.
To be eligible for a reverse mortgage the borrower must be:
- a homeowner
- at least 62 years old
- reside in the home
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4 - "So What's the Catch?"
Reverse mortgages are NOT "free money"
- The money received is still a loan - it accrues interest (interest and other loan
fees reduce the amount the borrower receives)
- The younger the borrower, the smaller the loan amount. On the other hand, older
borrowers must weigh how long they will enjoy use of the funds against initial costs
of the loan.
- Borrowers continue to hold title, so they still have to pay property taxes and maintain
the property.
Your consultant will also review alternatives to reverse mortgages to see if those
are better suited to your needs
- Home equity lines - Home equity loans and lines of credit (HELOC's) allow homeowners
to borrow against the value of their home. Both varieties require regular payments
on the borrowed amount.
- Downsizing � The decision to move to a smaller home is often a painful one due to
the years of memories in the existing property. The decision is easier with possibility
of moving to a warmer (or colder!) climate or closer to distant family.
Call today to speak with one of our experts!
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