Say you saw it in the Beacon | Housing Options
WA S H I N G T O N B E A C O N — O C T O B E R 2 0 1 5
Reverse mortgage From page B-12 cess a potion of it upfront and arrange for the remainder to be available at a later date as needed,” explained Omilan. Wilkinson says she is certain that the loan is what saved her friend’s living situation. She knew Medicare wouldn’t cover all the costs of Pacholec’s full-time homecare. “It was the only option,” she said. “A reverse mortgage gave her the ability to live in her home.”
Perceived risks Reverse mortgages sometimes have a bad reputation, but its opponents may be misinformed of the risks, Omilan said.
“A reverse mortgage has significant appeal because it is a non-recourse loan,” said Omilan. “There is no personal liability to the homeowner.” Many seem to fear that if they remain in their home too long, their loans will exceed the remaining home equity, and they will be forced out early, but this is inaccurate. If they are forced to leave the home, it is most likely because they have not paid homeowners insurance or property taxes, which are still required. A HECM reverse mortgage is also protected by mortgage insurance premiums paid by the homeowner. In cases where the house is sold upon end of life and the proceeds aren’t enough to pay the lender back in full, MIP ensures the bank “eats
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gage, the Federal Trade Commission, one of the government’s consumer protection agencies, says to be aware that: • oney to cover these ongoing costs. • Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole. • Before applying for a reverse mortgage, you must meet with a trained counselor from an independent government-approved agency. Try to include in these meetings anyone who would have any interest and/or expertise in your affairs, such as your children, an eldercare attorney or financial advisor.
the loss, and the heirs and the estate are completely unaffected,” explained Omilan. In other words, homeowners and their heirs will not be held responsible if their loan value exceeds their remaining home equity. If you want to bequeath your home to your children with a significant amount of equity remaining, a reverse mortgage might not be for you. Upon death, heirs would need to pay off the reverse mortgage if they wanted to inherit the house. Their other inheritance would remain unaffected.
Understand the rules If you’re considering a reverse mort-
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