Reverse mortgages could carry long-term problems.
Look before you leap.
Are you at least 62 years of age?
If yes, you could take out a reverse mortgage.
What is a reverse mortgage?
A reverse mortgage lets you have cash now for your home equity without selling your home now.
Sounds appealing, right?
According to a wfmz.com article titled “Life Lessons: Reverse mortgages: When are they dangerous,” it may have less than appealing consequences.
If your adult child inherits your home, he or she may be named in the foreclosure.
Even if it was your reverse mortgage?
Costs of upkeep
While you live in the home, you are still responsible for the upkeep of the home.
These expenses may add up fast.
Oh, by the way, I thought you were wanting to downsize and get out of home maintenance responsibilities.
Names on the mortgage
Are you married?
If so, you may want to include the name of your spouse on the mortgage to protect his or her living situation when you pass.
Rules regarding residency
If you do not live in the home for a year, the bank can foreclose.
Not enough cash
Even with a reverse mortgage, you may not be able to pay for at-home care.
The cost of this care can reach $12,000 a month.
Can reverse mortgages ever be a good idea?
If you have a family caregiver, they can be beneficial.
Depending on your qualifications, programs like Medicaid may also be an option.
Whatever you do, evaluate your situation and goals before making a decision.
What may be a blessings for one person, may be a curse for you.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: wfmz.com (January 24, 2017) “Life Lessons: Reverse mortgages: When are they dangerous”