In our last blog we mentioned a New York Times series focusing on retirement. These articles serve to raise awareness and to inform people of the importance of making financial decisions based on their specific needs and Medicaid Planning. The most recent article in the series dealt with reverse mortgages. As many of you may know, a reverse mortgage is a loan with a bank, where the bank pays the homeowner either monthly or in a lump sum, compared with a typical mortgage where the homeowner makes monthly payments to the bank. For some clients a reverse mortgage can be a terrific estate planning tool to make funds available to keep an elder in their home. However, the New York Times points out that reverse mortgages are not appropriate for everyone.
Reverse mortgages have very high closing costs, sometimes as high as eight percent of the loan. Questions consumers should ask to determine if a reverse mortgage is their best option:
How long do you plan to stay in your home? If you plan to stay home for just a couple of years, other kinds of loans might make more sense.
What do you plan to use the money for? If you are using the money for a vacation or plan to invest the funds, do not proceed with a reverse mortgage.
If you have any questions pertaining to Medicaid, guardianship, conservatorship or other elder law issues, please feel free to contact us Cohen & Oalican, LLP
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