One of the newest methods of providing addition income to those over the age of 62 is called a reverse mortgage. The concept of a reverse mortgage is to provide a better standard of living for those without a sufficient income but who have equity in their home that they can not spend. Thus the idea is for them is to put a reverse mortgage on their home to utilize that equity.
This idea often has great appeal to those who are struggling financially to make ends meet. Reverse mortgages have now been with us for a number of years – long enough to see the pluses and minuses of such a method. In fact, many of the very large financial institutions joined this market earlier but have withdrawn for a number of reasons. Currently the market is basically in the hands of those who were instrumental in producing today’s poor housing situation. The major issue is that the mortgages are peddled without regard to suitability.
Before a person enters into a reverse mortgage they should consider the many issues and side effects of a reverse mortgage. These include: the amount of the up front fees charged on these loans; who the loan is being made to; what the terms and conditions of the loan are. There are a number of loans which are made to only one member of a married couple. When this is done and that spouse dies, the loan is “called” and the surviving spouse must pay off the loan to remain in their own house. In most situations, the surviving spouse can not pay off the loan, making it possible for the survivor to be forced out of their house.
Please do not take out a reverse mortgage without getting proper advice as to the consequences of the loan. Contact us at 888.222.1328 for direction and counsel in regards to a reverse mortgage.
Contributed by MH Estate Planning Attorney and Senior Partner Dan R. Morris
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.