Reverse Mortgages – Are They a Good Choice for Seniors?

Elder Law

If you’re considering a reverse mortgage (also known as a Home Equity Conversion Mortgage) as a means to supplement your retirement plan, it’s important to know the pros and cons. Here are some insights from your elder law attorney in New Jersey.

The Pros

  • You don’t have to make any payments on these loans until you die or move.
  • Your credit record is not a big concern, as the key factors are the value of the home, the loan amount and your age as the borrower.
  • If the value of the property drops, your heirs won’t owe more than the value of the home when it is sold. If the value goes up, your heirs may inherit some money from the sale of the home after the debt is paid.
  • You can shop around as there are many different reverse mortgage products on the market, so you can get good rates with a bit of research and guidance.
  • It’s a good source of tax-free income if your money is tied up in your property and you don’t have a lot of cash flow from retirement funds or investments.

The Cons

  • Unlike a traditional mortgage, the amount you borrow will increase over time.
  • Your heirs will not inherit your property, but will inherit the debt of the loan, which would be paid off by selling the house. This will considerably reduce their inheritance.
  • There is no annual tax deduction of the interest.
  • You cannot leave your home for one year. If you leave after a year, the loan must be paid in full.
  • You have to be 62 years old or older.
  • The interest is still fairly high, and if you have good credit, good cash flow from other investments or other assets outside your home, there are better options like home equity loans or a second mortgage.

Make an Informed Choice and Protect Your Assets – Speak to Your Elder Law Attorney in NJ

If you would like to help your loved one get the legal assistance they need to protect their assets and wellbeing, speak to elder law attorney Frank R. Campisano today. Experienced in elder law and estate planning, he is compassionate and committed to his clients, ensuring that you’ll receive the highest quality legal expertise and guidance. In addition to sound elder law advice on preventing elder abuse, Medicaid assistance and Medicaid planning, you can also prepare additional estate planning documents, such as a Last Will and Testament, Power of Attorney documents, medical directives and trusts. For a free consultation, please contact us today or visit the website at http://www.scclegal.com/

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