Reverse Mortgage Loans
If you were to ask the average consumer to define the reverse
mortgage concept, you would find very few able to do so. Many
consumers, especially those who aren't up on their mortgage
products and their availability will never have heard of a
reverse mortgage, much less able to explain the concept. But it
may just be one of the best financial planning tools available
to many seniors and those reaching retirement age. As many
individuals reach retirement age, their fixed incomes simply
aren't adequate. They aren't receiving enough through social
security or a pension fund to take care of the rising costs of
living and the medical attention many older citizens must have.
So what is the solution? Many of these retirement age citizens
have children. Why can't their children supplement their
incomes, or simply take care of their elder care needs? The
simple fact is that many of their children aren't in a position
to care for their elderly parents. Their incomes aren't enough
to have money left over, and if both spouses work, there is no
one to take care of an aging parent.
It is at this juncture that many people have begun to turn to
the reverse mortgage in seeking the increase in monthly income
that is so desperately needed. The reverse mortgage offers older
citizens a way to benefit from the equity in their home, because
the reverse mortgage turns that equity into a monthly income.
Quite frankly, unless you live with your parents, or you intend
to move into your parents home when your parents pass, you
aren't going to retain the home; statistics attest to the fact
that the vast majority of children sell their parents home, once
their parents are no longer in need. Why not cash in on that
equity when your parents are alive, and need the monthly income?
The popularity of the reverse mortgage has been steadily
increasing, and many reverse mortgage companies expect 2005 to
be a banner year. As the idea begins to catch, and spread among
the elderly, there are more mortgage companies that offer a
reverse mortgage product. The key here is that most of these
elderly did plan for retirement; they did try to make the
necessary adjustments so that there monthly incomes would be
enough to see them through their retirement years. Thanks,
however, to the rising cost of medical care, prescription
medicine, and heating fuel, many older citizens have found that
their planned retirement income each month is simply not enough.
There are those reaching the retirement years, for which the
reverse mortgage is not an option, simply because they have no
equity in their homes, or they don't own a home; but for the
remaining seniors, it's an option that I would exercise,
especially if I were certain my home would be sold during an
estate or inheritance sale. The money that the reverse mortgage
generates, can add so much to the few years we have during our
retirement in the areas of travel, entertainment, and sheer
enjoyment of life. Since we can never be sure that we've
properly prepared for retirement, or that some unexpected
emergency won't knock us off our feet, or that we simply do not
have enough thanks to the stock market losses of recent years,
the reverse mortgage is one of the best ways for older citizens
to access the equity in their homes and turn it into ready cash.
We have saved the best part, however for last: any proceeds from
the reverse mortgage are tax-exempt proceeds. In other words,
you will not have to pay tax on the money. There are other,
tax-exempt options, but the reverse mortgage remains one of the
most conducive to the senior citizens needs, as well as those of
their families. The interest payments on a reverse mortgage are
deferred until death, therefore, seniors do not have to be
concerned with making interest payments or tax payments on the
proceeds.
If you're not familiar with the reverse mortgage, and you think
you might benefit, or that your parents might benefit, take a
moment to seek the advice of a financial officer, and then quite
possibly your attorney. Never make any decision before you fully
understand what the consequences of your decision might be,
legal or otherwise.