ElderLaw News

ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President.

Reverse Mortgages

By Keith Robinson

Until recently there were two main ways to obtain cash from your home. You could sell your home, but of course you would have to move. You could borrow against your home, but you would then have to make monthly payments. Reverse mortgages now give you a third way to obtain cash from your home without leaving the home or making monthly payments. A reverse mortgage is a loan against your home that you do not have to pay back as long as you live in the home. You can receive funds as a lump sum, in monthly payments, or at times and amounts as you choose like you can with an equity line.

There are several eligibility rules for reverse mortgages. For most reverse mortgages, all borrowers must be at least 62 years old. Additionally, owners must occupy the home as their principal residence for the majority of the year. Single family homes and most condominiums are eligible for reverse mortgages.

Reverse mortgages typically require no repayment as long as you live in your home. The mortgages are repaid in full with interest and other charges when the last living borrower dies, sells the home, or permanently moves away. Because the borrower makes no monthly payments and interest accrues, the amount owed on the reverse mortgage grows larger over time. Reverse mortgage borrowers continue to own their home, so they are still responsible for property taxes, insurance and repairs.

Most borrowers become interested in a reverse mortgage when they have a need to eliminate their current mortgage payment or receive cash from their home, while still being able to remain in their home. Reverse mortgages also are not credit based like most other mortgages, and verification or documentation of income is not a consideration.

A reverse mortgage is not right for everyone. They can be costly in both closing costs and also interest and fees that accrue over time, so all options should be considered.

Keith Robinson is the Vice President of Mortgage Lending at Towne Bank. Special thanks to Mr. Robinson for his submission of this article to the newsletter.

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The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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