Retirement Planning: Be Apprised Of Your Options

June 10, 2011

Intelligent retirement planning that is given enough time to succeed will usually pay huge dividends.  However, the fact is that the future is uncertain and there are no absolute guarantees. Many people thought that they had effective retirement plans in place during the early part of the 21st century, but the financial meltdown of 2008 certainly changed the landscape. Events that are out of the control of the individual such as the sub-prime crisis are difficult to plan for, but the solution is to be flexible, informed, and proactive about doing everything that is within your power to seize control of your own financial destiny.
Being apprised of all of your options is key, and one of these is the reverse mortgage. To qualify for a reverse mortgage you must be at least 62 years of age, own your home outright or have significant equity in it, and you must live in the home as your primary place of residence.  The lender under a reverse mortgage provides you payments  either in a lump sum, in increments, or on an as-needed basis in a manner similar to a home equity line of credit. In return, the lender receives equity in your home.
While you are living in the residence you are required to keep up with routine maintenance and pay the property taxes, and if you were to fail to do these things the loan could be called.  The loan is due and payable upon your death or after you voluntarily choose to move out of the residence. Most of the time the property is sold upon your death and the loan is paid off with proceeds from the sale. If there were a remainder of proceeds after satisfying the debt, it would go to your heirs.  However, if the property is worth less than the outstanding loan amount your estate  is generally not responsible for the deficiency.

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