Seniors, are you having trouble getting through retirement? Have you’ve heard about Reverse Mortgages and how other seniors have pulled the equity out of their homes to help them get through retirement? Does all this Reverse Mortgage information confuse you?

It’s important to understand what a Reverse Mortgage is as well as the benefits and risks of this type of loan before you sign any papers. Banks offer information on these types of loans, but you may find attending a workshop to be more helpful.

What Is It?

Investopedia.com defines a reverse mortgage as “a loan. A homeowner who is 62 or older and has considerable home equity can borrow against the value of their home and receive funds as a lump sum, fixed monthly payment or line of credit. Unlike a forward mortgage – the type used to buy a home – a reverse mortgage doesn’t require the homeowner to make any loan payments.

”Instead, the entire loan balance becomes due and payable when the borrower dies, moves away permanently or sells the home. Federal regulations require lenders to structure the transaction so the loan amount doesn’t exceed the home’s value and the borrower or borrower’s estate won’t be held responsible for paying the difference if the loan balance does become larger than the home’s value. One way this could happen is through a drop in the home’s market value; another is if the borrower lives a long time.”

How Do Reverse Mortgages Work?

When you take out a reverse mortgage loan, you basically pull out the equity you have in your home to help you through retirement. You can choose to take out that equity in one of two ways:

• One lump sum
• Monthly payments

The loan does not need to be paid back until you either sell your home or stop living in it.

Your homeowner’s insurance needs to be maintained and the taxes on your home paid.

If you choose to, you can make payments on your reverse mortgage. But these payments are not required.

What Benefits Does a Reverse Mortgage Offer Seniors?

Most people who are over the age of 62 have half of their net worth tied up in their homes. A Reverse Mortgage allows you to cash out your equity when you need it while still living in your home. This is the most appealing feature of this type of loan. With a Reverse Mortgage, it’s quite possible to live comfortably in retirement.

Are There Risks Involved?

This all sounds great, but are there risks involved? Yes. A Reverse Mortgage puts your home at risk because it limits the amount of money you can pass on to your children when you die. How?

1. When you die and your children inherit your home, they must either pay off the mortgage themselves or sell the property to pay off the loan.
2. If you can no longer live independently in your home and must move into a nursing home, the reverse mortgage must be paid off. This usually means you must sell your home.
3. The interest rates on a Reverse Mortgage loan may be high depending on your credit.
4. If you put your home up as collateral and then borrow money against your home, you risk losing it.

Also, be aware of other possibly risky scenarios. For example, if you sign the reverse mortgage and go into a nursing home while your spouse lives in the home, the terms state the loan must be paid back. This means your spouse may no longer have a home to live in.

Risks can be reduced by limiting the amount you borrow on the loan. If the loan is smaller than the total equity, you can sell the home and still have enough to buy a smaller place live.

And since the risks could involve and affect your children greatly, talk with them when you take out a reverse mortgage.

Knowing About Reverse Mortgages

Maintaining your independence and solving a cash flow problem if your retirement benefits don’t cover your expenses is ideal. So carefully review all available information as well as the terms on a Reverse Mortgage. And once you understand the benefits as well as the risks of Reverse Mortgages, you can decide whether or not it’s good for you.

Many government agencies caution seniors to review the terms and consider all their options before taking out a Reverse Mortgage.

Are you confused about Reverse Mortgages? Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate with your questions. I can help. Call (718) 253-9600 ext. 206 or email [email protected] today.

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Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206

When buying or selling your Brooklyn  home, there are many long-term conditions you should take into consideration for future planning. Will you look back years from now and wish you had not sold? Will your new home be something that you’ll love long term?

In today’s chaotic Brooklyn New York real estate market, jumping from one home to another every few years may no longer be a financially viable option. When purchasing a home for the long term, here are a few questions you should ask yourself:

Questions for long-term Brooklyn new York real estate planning:

• Death in the family – If you’re a couple, what would happen if one of you passed away? Would the home you currently live in still work? That property may not look as attractive, if you’re going to be the only one caring for it.
• The option of renting – If you want to move, but you can’t get the money you need out of your house to justify a sale, will it make a good rental property? Renting your home may be a great way to maintain some cash flow while still downsizing your living space during your retirement years.
• Location – If you’ve envisioned an activity-filled retirement, will your location allow you to fulfill that dream? Is there a college nearby to pursue that master’s degree you’ve always wanted … can you go to cooking school … what about volunteering at a community center?
• Flexibility of home – Have you considered how your home will be able to adapt to your changing needs? Maybe an upstairs master bedroom was attractive when you had children, but if you happen to face limited mobility, those stairs might put a kink in your lifestyle. Before purchasing, use a floor-planning tool to determine the types of spaces that are important to you.

Don’t put yourself in a situation where you’re forced to sell your home because it doesn’t fit your future lifestyle. Make sure you invest in a Brooklyn New York home where you can create life-long memories.

If you need help with your long-term Brooklyn New York real estate planning, please call me Charles D’Alessandro your Brooklyn Realtor® of Fillmore Real Estate at (718)253-9600 ext.206 or email me at [email protected] ,or your Brooklyn real estate search can start HERE and NOW, with www.CharlesTheRealtor.com