A Reverse Mortgage Could Limit Entitlement Benefits

8/02/2009

posted by N. Sioris

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Generally speaking, if you get a reverse mortgage your benefits from Social Security and Medicare are not affected or reduced in any way. In fact, one of the most prominent statements included in educational reverse mortgage guides and promotional ads, routinely say: "Social Security and Medicare benefits are not affected when you get a reverse mortgage on your home."


True - But With Conditions

This is absolutely true as long as you are speaking strictly about regular Social Security retirement income and federally funded Medicare. However, if you are a recipient of any local government or state backed programs, such as Medicaid, food stamps or other need-based assistance programs, you must be very careful when you get a reverse mortgage.

Most of the need-based programs require that your income and or assets remain below a certain level in order for you to continue to be eligible. Most of these programs have a monthly income threshold. If your income exceeds the threshold you will be disqualified from receiving the benefits. If you are considering whether to get a reverse mortgage or not, you will want to make certain before-hand what the income limitations are in order to maintain your current level of benefits.


Plan Ahead - Proceed With Caution

You can then structure your reverse mortgage loan proceeds to be disbursed in monthly increments that will keep you under the threshold for your entitlements. Just be careful, and make sure you do your research FIRST so that you do not find yourself in a perilous financial situation that possibly cannot be undone later.

If you are currently on Medicaid or you are receiving food stamps, you may wish to check with your local Medicaid office here. You can also call Medicare at 1-800-Medicare.

The American Bar Association has also rendered advice on this topic. You may wish to review what they have to say as well.

More People Turn To Reverse Mortgages

8/01/2009

posted by N. Sioris

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With the economy in crisis, more people than ever before are feeling insecure about retirement. Whether you are all ready retired or thinking about retirement, there is a lot of insecurity surrounding this topic. AARP released a report called, "Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older."

As people live longer and fewer corporations offer defined benefit plans it has become more challenging than ever to prepare adequately for retirement. Combining those two realities with the fact that most retirement nest eggs are tied to the stock market, and you have more than enough insecurity to go around. Below is a chart taken from the AARP Retirement report that illustrates how the current economy has affected Americans in or approaching retirement.

"During the past 12 months, workers at least 45 years old report many ways that recent changes in the economy have affected them or their family. As seen in Figure 1, over half (56%) have found it more difficult to pay for such basic items as food, gas, and medicine, while slightly fewer helped a family member pay bills (47%) and found it more difficult to pay for utilities such as heating and cooling, or phone service (45%.)"




Some people are choosing to get a reverse mortgage to help out with shortfalls in the areas mentioned in the AARP survey. Possibly you are someone that might be able to financially benefit if you get a reverse mortgage. Feel free to contact us if you want to find out if this solution could be right for your situation.

When Is It A Good Time To Get A Reverse Mortgage?

7/29/2009

posted by N. Sioris

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Over the weekend I was invited to a get-together where there were people from all different age groups. Several of the older attendees knew that I work in the reverse mortgage field. One gentleman in his mid 70's pulled me aside and said, "My wife has been saying that she is nervous about what will happen financially if I pass away before she does." He went on to say that she suggested that maybe they should get a reverse mortgage. He then asked me, "Do you think she is right, should we go ahead and get a reverse mortgage, is now a good time?"


Do You Need The Money?

My first question to him was; "Do you need the money?" He said, "No, we're fine right now, but if she doesn't have my retirement income if I should pass away, she's worried that she might not be able to finish paying off the mortgage and maintain the bills." As it turns out they have less than a hundred thousand dollar mortgage balance on their home that's worth in excess of three hundred thousand. They are not strapped for monthly income and they have some other assets as well.

My short answer to him was, "No, I wouldn't get a reverse mortgage at this time." He took a step back and looked at me with a puzzled expression on his face. He obviously wanted a more in depth explanation for my answer. So we had a long chat and the bottom line is that my advice to him was that if the scenario he presented does happen, then his wife can go ahead and get a reverse mortgage at that time. By then she will be older, hence eligible for a higher loan-to-value percentage, and their loan balance will be less or possibly even non-existent.


A Light-Bulb Moment

During our conversation it became clear (once again for about the hundredth plus time) how mis-understood HECM reverse mortgages are. This charming gentleman had no idea that even though there are no mortgage payments required on HECM reverse mortgages, there is deferred interest accumulating on the loan from day one, and will be deducted from his estate or heirs inheritance when the home is sold or refinanced at the time the loan is paid back. From the look on his face as I explained how the loan is a "rising debt" loan, I could tell he was truly experiencing a light-bulb moment.

To get a reverse mortgage when you do not really need the money makes these loans a very expensive proposition. But, as I told him, "HECM reverse mortgages are expensive if you don't need the money. However, they are NOT expensive if you do need the money and you have no alternative assets."

What Is A Reverse Mortgage - Video

7/21/2009

posted by N. Sioris

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What is a reverse mortgage loan? How can the money be used? How do I qualify for a reverse mortgage loan? Do I have to make payments on a reverse mortgage loan? Do I have to pay taxes on the money from a reverse mortgage loan?