Kevin's Corner

National Council on Aging

The National Council on Aging issued a report in 2005 about reverse mortgages and their application for helping seniors with the high cost of retirement. I wanted to share some of their prospective about reverse mortgages with you:

When you are in good health, it is hard to imagine that you will ever need help with everyday tasks at home. But a serious a serious fall or chronic illness can quickly drain hard-earned retirement dollars and leave you facing a cash crunch.

Planning for your future health needs can be frustrating. As you get older, high quality long-term care insurance may become unaffordable. Some people do not want to rely on government or deplete their retirement funds to qualify for public programs. If you are like most people, you could end up using a “pay as you go” approach, where you rely on income and savings, and hope for the best.

There is another option. For many older families, home equity is their single, biggest financial asset. Using home equity through a reverse mortgage could be an important strategy to help deal with the financial challenges of living at home with a chronic health problem. Reverse mortgages are a special type of loan that allows people age 62 or older to convert home equity into cash while they continue to live at home for as long as they want. These types of loans are called “reverse” mortgages because payments flow from the lender to the homeowner.

Many people hold onto the equity in their home as a nest-egg to deal with financial emergencies. But a reverse mortgage can be more than just a last resort. If used wisely, these loans can pay for preventive measures and day-to-day support so you can continue to live at home safely and comfortably. They can also strengthen your financial plans by filling in gaps, and can help you manage your cash flow to deal with declining health and ability.

Using home equity for a chronic health condition can seem like a good idea. But is it right for you? It is a decision you should consider carefully since the house may be your most valuable financial resource. It is important to remember that every person’s situation is unique, so there are no right or wrong answers.

People who expect to live at home for many years should consider a reverse mortgage. This type of loan allows older homeowners to convert a portion of their home equity into cash while they continue to live at home for as long as they want.

Unlike conventional mortgages, there are no income requirements for these loans. Borrowers do not need to make any loan payments for as long as they continue to live in the home as their main residence. When the last borrower moves out of the home or dies, the loan becomes due.

Once you get the loan, the money is available for you to spend. The money borrowers receive is tax free, and can be used for any purpose. Reverse mortgage borrowers continue to own the home and are responsible for paying property taxes, hazard insurance, and maintaining the home.

Most of the costs borrowers pay are similar to those of a conventional home loan or to refinance an existing mortgage. Most of the upfront costs are regulated, and there are limits on the total fees that can be charged for a reverse mortgage. Closing costs can be completely financed as part of the mortgage.

A unique feature of reverse mortgages is that you must first meet with a government-approved reverse mortgage counselor before your loan application can be processed or you incur costs.

Founded in 1950, The National Council on Aging is a national network of organizations and individuals dedicated to improving the health and independence of older persons; and increasing their continuing contributions to communities, societies, and future generations.

See what the NCOA is talking about and call me for your free, no obligation personal analysis about how a Kastle Mortgage reverse mortgages can assist you in meeting your retirement expectations. It only takes a call.

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