Friday, May 14, 2004
Reverse mortgages may be a way to cover long-term care
[Robert J. Bruss, "Profits, pitfalls of reverse mortgages," The Wichita Eagle, 9 May 2004.]
As the baby boom generation ages, state and federal governments will no longer be able to provide the benefit levels granted under Medicaid and other welfare programs. This means individuals must begin to plan for their own care as they face retirement.
As columnist Jane Bryant Quinn points out in her article, "What to Look for in an LTC Policy":
If you have ears to hear, listen to what the government is telling you about nursing-home care. You cannot expect continued expansion in the programs that help pay the bills.
The Medicaid program is being shaved. It will still be there to help nursing-home patients who run out of money, but your benefits may be limited.
What's more, Congress will keep cracking down on middle-class people who hide their assets in order to go on Medicaid earlier than they should.
Over the long run, you're going to have to cover these expenses yourself -- through personal savings, a reverse mortgage against your home, or with long-term-care (LTC) insurance.
A recent article in The Wichita Eagle provides some excellent information on reverse mortgages:
A reverse mortgage pays tax-free income to the senior citizen homeowner. It is the exact opposite of a traditional "forward" mortgage where the homeowner borrows money and then repays that borrowed money, plus interest, to the lender.
To qualify for a reverse mortgage, the homeowner must be at least 62. In the case of husband and wife, both co-owners must be at least 62. If one co-owner spouse is not yet 62, he or she can sign a quit claim deed to the other over-62 spouse who then becomes eligible for a reverse mortgage.
There are no restrictions on how reverse mortgage income can spent by the homeowner. The senior citizen homeowner's credit and income are irrelevant. However, the senior homeowner cannot have any unpaid federal obligations and must not be involved in a bankruptcy.
Most traditional mortgage lenders, such as local banks and mortgage brokers, do not offer reverse mortgages. The largest reverse mortgage originators are Financial Freedom Plan, Wells Fargo Mortgage, Seattle Mortgage and GMAC. Dozens of smaller regional lenders also specialize in reverse mortgages.
The best place to easily locate a reverse mortgage lender in your area is to go on the Internet to www.reversemortgage.org. Then click on your state for a list of lenders and the types of reverse mortgages they offer.
By calling their toll-free 800 numbers listed on the Web site, you will quickly be in touch with a local reverse mortgage representative.
[Robert J. Bruss, "Profits, pitfalls of reverse mortgages," The Wichita Eagle, 9 May 2004.]
As the baby boom generation ages, state and federal governments will no longer be able to provide the benefit levels granted under Medicaid and other welfare programs. This means individuals must begin to plan for their own care as they face retirement.
As columnist Jane Bryant Quinn points out in her article, "What to Look for in an LTC Policy":
If you have ears to hear, listen to what the government is telling you about nursing-home care. You cannot expect continued expansion in the programs that help pay the bills.
The Medicaid program is being shaved. It will still be there to help nursing-home patients who run out of money, but your benefits may be limited.
What's more, Congress will keep cracking down on middle-class people who hide their assets in order to go on Medicaid earlier than they should.
Over the long run, you're going to have to cover these expenses yourself -- through personal savings, a reverse mortgage against your home, or with long-term-care (LTC) insurance.
A recent article in The Wichita Eagle provides some excellent information on reverse mortgages:
A reverse mortgage pays tax-free income to the senior citizen homeowner. It is the exact opposite of a traditional "forward" mortgage where the homeowner borrows money and then repays that borrowed money, plus interest, to the lender.
To qualify for a reverse mortgage, the homeowner must be at least 62. In the case of husband and wife, both co-owners must be at least 62. If one co-owner spouse is not yet 62, he or she can sign a quit claim deed to the other over-62 spouse who then becomes eligible for a reverse mortgage.
There are no restrictions on how reverse mortgage income can spent by the homeowner. The senior citizen homeowner's credit and income are irrelevant. However, the senior homeowner cannot have any unpaid federal obligations and must not be involved in a bankruptcy.
Most traditional mortgage lenders, such as local banks and mortgage brokers, do not offer reverse mortgages. The largest reverse mortgage originators are Financial Freedom Plan, Wells Fargo Mortgage, Seattle Mortgage and GMAC. Dozens of smaller regional lenders also specialize in reverse mortgages.
The best place to easily locate a reverse mortgage lender in your area is to go on the Internet to www.reversemortgage.org. Then click on your state for a list of lenders and the types of reverse mortgages they offer.
By calling their toll-free 800 numbers listed on the Web site, you will quickly be in touch with a local reverse mortgage representative.
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