5 Tough Estate Planning Questions You Should be Able to Answer

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Estate planning is something that most of us put off repeatedly due to our own discomfort with the idea of becoming disabled, mentally incompetent, or, well, dead. It’s definitely not a pleasant thing to think about, but unfortunately it is a reality that we will all eventually face. At least until something like ‘The Singularity‘ comes to fruition, anyway. 😉

While scientific and medical advances have impressively increased the human life expectancy, they have yet to discover a magical fountain of youth that will allow us to live forever. Thus, it’s important that you plan accordingly so that the family members who survive you will be appropriately cared for. For starters, you need to have answers to the following questions:

  1. Who will raise your children if you and your spouse both die unexpectedly?
    This question is one of the main reasons some people avoid making a will. The idea of someone else raising your children feels terribly sad! But, if you are a single parent or widow, it is even more important that you make plans for your children, in case anything happens to you while they are still minors. Even if you are married to your children’s other biological parent, it can be extremely difficult to agree on who to select to raise your kids if you both die at the same time. Although it may cause tension and even some arguments, it’s an important issue to push through so that your children’s future isn’t determined by a judge they’ve never met.
  2. Are there any important relationships in your life that you’ve kept secret?
    If you have a significant relationship with someone and would like that person to be cared for after your death, you must speak up about it before it’s too late. Oftentimes, attorneys will repeatedly ask clients if there are any relationships that you haven’t disclosed yet because of this very issue. In order to fully advise you about your obligations and rights, your attorney needs full disclosure.
  3. Have you frozen any of your genetic material?
    If you pass away with existing, viable frozen sperm, eggs or embryos, you’ll need to think about whether you want to provide for any children that may be conceived after your death.
  4. Do you have any family members that your attorney doesn’t know about?
    Perhaps you had a child out of wedlock years ago, or maybe your father had children with a woman other than your mother, giving you half-siblings. Regardless of your current relationship with them, be sure to alert your lawyer to their existence. Make it clear in your Estate Plan whether you want them to be included in your will or not, because the likelihood of them making a surprise entrance at your funeral – or at a later date – is high. It’s likely that their appearance will be stress-inducing for everyone involved, unless you take care of all of the details in your Estate Plan.
  5. At what point would you like to have the so-called “plug” pulled?
    Part of creating an Estate Plan includes writing a Health Care Directive, which essentially states at what point you feel that your quality of life is no longer worth holding onto, should you become critically ill. By setting out specific details about when you would like medical intervention to cease, you will give yourself more control over your end-of-life care.

Ultimately, creating your Estate Plan is your chance to set things into motion for your descendants and family members who survive you. As difficult as it may be to ponder, it’s that much more important that you push through the uncomfortable feelings and do it anyway.

 

Image credit: Dan Moyle

How to Put a Stop to Familial Identity Theft

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Identity theft is a crime, regardless of who is doing it – and it’s important to know how to put a stop to it if it’s happening to you. There have been reported cases of identity theft among family members who share the same name. A father and son, for example, even if they are Jr and Sr, still for all intents and purposes have the same first and last name.

A recent case came to light wherein a man’s father was essentially manipulating his son’s credit rating by posing as the son to apply for a multitude of things, including a mortgage loan – complete with forged signatures! A situation like this can be extremely detrimental to family ties, but must be dealt with accordingly.

Anytime someone knowingly poses as another person in order to make use of their credit, action must be taken. If this has happened to you, it may feel very conflicting to report your family member to the authorities. In that case, you should attempt to talk to the person in question first and let him/her know that what is occurring is illegal and very damaging to you personally and financially.

You can also investigate whether or not the Consumer Reporting Agencies are at all at fault for combining both of your financial identities.

If, after a proper discussion and investigation, your family member continues to use your personal information for his/her own financial benefit, your next step would be to connect with a credit repair attorney in your area. An experienced attorney will know exactly how to help you take back control of your identity, and will be able to send a formal cease and desist letter to the family member in question.

Your attorney will help you make contact with all of the Consumer Reporting Agencies to report what has happened and to demand that corrections are made to your file so no further damage is done to your credit score. At this time, legal action may have to be taken against the identity theft in order to stop them from using your name and other personal information. It is never pleasant when we have to take legal action against a family member or friend, so make sure that you’ve made every attempt to mediate the situation before taking it to an attorney.

After your current situation gets resolved – either through the court system or via mediation – you’ll want to take steps to prevent something like this from happening in the future. If you get the feeling that the behavior may repeat itself, you may want to think about legally changing your name. This will eliminate any confusion about your identity being separate from that of the perpetrator.

Remember: identity theft is illegal! Using a family member’s identity is NOT OK, and needs to be stopped, regardless of how emotionally difficult the process may be.

Image credit: Nellie Mckay

 

In Re Washington: The Details of a Pivotal Foreclosure Case

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Although you may be aware that there is a statute of limitations on most forms of debt, you should also know about the limitations on foreclosure complaints in New Jersey. What this means for many people with long-lasting, unresolved foreclosures is that they may discover that their bank or lender no longer has any hold on the mortgaged property. A decision that was recently made regarding a NJ bankruptcy case, known as In re Washington, has a lot to teach us – especially those who are currently involved in a long-standing foreclosure matter.

In the New Jersey bankruptcy case, In re Washington, the borrower took out a mortgage for a home in February, 2007. His loan was a 30 year, adjustable rate mortgage and note. Unfortunately, this buyer was unable to follow through with his mortgage agreement, and officially defaulted in July of 2007. His lender began a foreclosure action against him in December of 2007, bringing forward the due date for the total amount owed on the loan (from 30 years down to six years).

The foreclosure action was dismissed in July of 2013 because of the lender’s inability to provide necessary documentation to the court. Afterward, the lender failed to appeal that particular dismissal, nor did it start another foreclosure against the borrower. In all probability, this particular property more than likely slipped through the system, forgotten amongst the thousands of other New Jersey foreclosure cases.

In March, 2014, the debtor in question filed for bankruptcy, during which he began proceedings against his lender to render his loan unenforceable. His fear was that, since the foreclosure never went through, that he would still somehow be held financially responsible for the property. As he was filing for bankruptcy, one can only imagine that he was not in a position to pay back a mortgage for a home in which he wasn’t even residing.

His argument centered around the New Jersey Statute of Limitations; specifically the six year statute of limitations applicable to negotiable instruments according to the Fair Foreclosures Act (N.J.S.A. § 2A:50-56.1). This limitation prohibited the lender from taking any further foreclosure action (or other) against the debtor because the six year statute of limitation time period had expired.

The lender in this matter attempted to argue under New Jersey common law, that foreclosures are subject to a 20 year statute of limitations time period. The court agreed with the borrower in this case, voiding the lender’s lien and any proof of claim in the borrower’s bankruptcy matter.

Due to the outcome of this particular case, it is important to realize that debtors have rights! If you have been involved in a matter wherein a foreclosure drags and drags, seemingly never to be resolved, take the time to read up on your state’s statute of limitations policies regarding foreclosures. Always make sure that your foreclosure matter has been resolved, and if not, ensure that you will not be held responsible for the cost of the home many years later.

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Can I Move to a Different State to Escape my Creditors?

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Many times, people who are deep in debt feel as though they are being “chased” or “followed” by their creditors or debt collection agencies. You may be receiving a lot of phone calls, letters or emails requesting or demanding that you make good on the money you owe. This can be very overwhelming and can create a sense of panic in anyone.

For the sake of this article, we’re going to assume that your debt is real and was, in fact, incurred by you. Even if you acknowledge that you do owe the money, you may not currently be in a position to be able to pay it back. That’s a tough spot to find yourself in, and one that may induce feelings of frustration. Although you may have thought you’d be able to easily repay the money you borrowed, sometimes our life circumstances change.

Is there any way for me to “escape” my creditors? Can I move away?

In desperation, some debtors have hashed out elaborate plans to move, without leaving anyone with a forwarding address, in order to get out from under the debt they owe. While it’s possible that this may result in a temporary reprieve from the constant contact with your creditors, ultimately you cannot outrun a debt.

In almost every case, a lender who has been shorted on money they are owed will report any non-paying debtors to the major credit reporting agencies (Equifax, Experian and Trans Union). Once your debts have been recorded on your credit report, they will follow you everywhere you go. Your credit score will be negatively affected, and you will have great difficulty getting any type of loan, and in some cases – insurance, employment, and even a place to rent.

The better choice would be to face your creditors head-on with the help of an attorney, since running away will do nothing to eradicate your debts and will ultimately only make your lenders angrier. While it may seem implausible to spend money on attorney’s fees when you are already deep in debt, you’d be surprised how insignificant attorney’s fees can seem after your mountain of debt is reduced to mere ant hills.

Find a NJ attorney who has loads of experience negotiating directly with creditors. Look for someone who has a great track record, and whose past clients rave about him/her. It is your right to interview any attorney you may be thinking of hiring. After all, you will be paying their bill, so don’t hesitate to ask questions about their success rate in debt negotiation and credit repair. Be sure that s/he has experience working with cases that are similar to yours.

On the flip side of the coin – if you are considering moving because you’ve received a job offer, or if you simply need to move for other personal reasons – don’t let your debt prevent you from moving. You are in no way required to stay put simply because you are in debt. Just know that moving won’t eradicate your debt, and you won’t be able to outrun it, but you are allowed to move (anywhere) at any time, even if you owe money to creditors.

 

 Image Credit: Bill McChesney

Bankruptcy After Sheriff’s Sale – Will it Save my Home?

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If you are having trouble paying your mortgage bill every month, foreclosure is most likely on your mind. Perhaps you have already stopped making your home loan payments, so you know that foreclosure is imminent if action isn’t taken soon.

Letting your property go into foreclosure is a decent solution if you don’t want to remain living in your home anymore and you simply can’t afford to keep paying the mortgage every month. As long as you have familiarized yourself with the ramifications of having a foreclosure on your credit report, (the damage it will do to your credit worthiness for the next few years), giving up your home to foreclosure isn’t always a bad thing. Your lender will take possession of the home, and, aside from any deficiency judgements, you will be able to move on with your life and hopefully find a much more affordable place to live.

Many times, however, we see clients who actually do wish to keep their homes. Often, these clients are mere weeks away from the Sheriff’s Sale of their home when they come to us for help! Luckily, we’ve done this enough times to reassure you that, even if your Sheriff’s Sale is imminent, we can help. By filing for bankruptcy, your foreclosure will be put into what is called ‘Automatic Stay,’ which prohibits any of your lenders from collecting any money from you, including your mortgage lender.

My Sheriff’s Sale Already Occurred. Can Filing for Bankruptcy Reverse it?

If your property’s Sheriff’s Sale has already passed, filing for bankruptcy simply can’t help you to keep your home. There is a very short 10 day redemption period after your Sheriff’s Sale during which an automatic stay may still be able to get your home back, but after that 10 day period, you will officially have no legal claim to your property. You will be evicted, if you haven’t already, and you will not have any more time to attempt to save your home.

The most important piece of information about saving your home from a New Jersey foreclosure is: the faster you act, the better. Too often, homeowners who are at risk of foreclosure don’t want to face reality. While this is completely understandable, ignoring your impending Sheriff’s Sale and eviction won’t make it go away. Of course, there are always exceptions to the rule, but in general, your lender isn’t going to forget that you haven’t made your mortgage payment in over a year.

Usually, the foreclosure process gets triggered once a homeowner becomes only 1-2 payments behind on their mortgage loan. As soon as you receive a foreclosure notice from your bank, you should set up a meeting with an experienced New Jersey bankruptcy attorney who has a lot of experience with foreclosure defense. We can make a lot of magic happen here at Veitengruber Law, but the sooner we know what kind of help you need, the better able we’ll be to plan your defense.

We offer free office consultations and we are pleased to announce that we are now offering free phone consultations to New Jersey residents who cannot make the drive to our Wall or Bordentown offices. Don’t wait any longer – call us today!

 

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Will a Secondary Credit Number Give Me a New Credit History?

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If you, like many other Americans today, have found yourself with a less-than-desirable credit score, you most likely feel frustrated and powerless when it comes to getting a loan. Buying a home, a new car, or even a home appliance can prove next to impossible with a bad credit score. There are loan companies that will lend to borrowers with low credit scores, but you’ve probably already realized that they’ll charge you an astronomical interest rate.

You may find yourself wondering if any other options exist: is there a way to “get around” the fact that you have a low credit score? It can be difficult to accept your limited sub-standard loan options, especially if you are currently in a good place financially and your credit score just hasn’t caught up yet.

If you’ve found yourself in this position, beware of companies who will gladly capitalize on your desire to borrow money with bad credit. Businesses like this may offer you something called a “Secondary Credit Number” or a “Credit Privacy Number.” They’ll be sure to tell you that their strategies are legal, and that you can use this new number (for which they will charge you a hefty flat fee) to apply for new lines of credit without using your own personal information.

You may be wondering – “How can I apply for a loan without giving any of my real personal information?” The answer is simple: you can’t, unless you’re ok with committing fraud.

These shady credit repair companies will tell you to use the “Secondary Credit Number” instead of your Social Security Number on loan applications, in order to keep lenders from seeing your actual credit score. By using verbal trickery or simple omission, they’ll fail to reveal that your “Secondary Credit Number” is actually a fraudulent Social Security Number. Sometimes they are numbers taken from children or people who are deceased.

Rather than doing business with scammers who only have fraudulent practices to share with you, there are legal steps you can take to improve your real credit score. It’s important to realize that it does take some time to lawfully clean up a really bad financial past. However, if you’re patient and diligent about making the right changes, your credit score can improve significantly in 6 months to a year.

By working with a legitimate credit repair specialist who is certified and experienced with debt negotiation techniques, you will guarantee yourself aboveboard results that will last a lifetime. Steer far away from any “debt settlement” or “credit repair” companies that are not licensed by the State of New Jersey. If they are not licensed, they are not abiding by New Jersey laws.

A New Jersey bankruptcy attorney who specializes in credit repair will be able to help you attain your goals while staying on the right side of the law. Some attorneys offer free office or phone consultations so they can assess your financial circumstances and lay out a plan to raise your credit score. Although you may be wary of attorney’s fees, your return on investing in the right person will give you an exceptional pay-off that will be well worth every penny.

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My Debt has been Charged Off: Do I Still Have to Pay?

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If you have recently discovered that one of your old debts is now listed on your credit report as ‘charged off,’ you may initially get excited and think that you no longer owe any money to that creditor. After all, ‘charged off’ sounds like the debt has essentially been written off, with no further action required.

Alas, the name in this case is often very misleading and causes a lot of confusion among debtors.

What is a Charge Off, Anyway?

Credit card companies are businesses who have a bottom line. Any time one of their debtors goes more than (usually) six months without making good on the money they owe, that particular debt is considered to be charged off. What this means is that the company has deemed your debt as a ‘loss’ for them rather than a ‘profit’, as you haven’t made good on your payments.

Essentially, a charged off debt is a creditor’s way of taking that debt off their books as an asset, which they are required to do with debts that seem likely to remain unpaid. And, while this may sound like you’re off the hook, rest assured that you are not.

Any debt by definition is owed until it is paid in full. Just because your creditor wrote your debt off its books doesn’t mean they won’t come after you for the money. They can still call you and send you requests in the mail for the debt that you owe.

Any debt that becomes classified as charged off immediately gets reported to all of the credit reporting agencies and will mar your credit report and lower your credit score significantly. A charged off debt that you simply fail to make good on looks worse on your credit report than almost anything else you can do.

With a charged off debt in your financial history, it will be next to impossible for you to make any purchases with any kind of credit card (your original charged off account will immediately be closed, naturally). Renting an apartment may be off the table for someone with a long-standing, unpaid debt as well. A history of late payments that you eventually made good on looks much better to anyone who has any interest in your credit worthiness than if you have a charged off debt that you simply choose to not pay.

Any charged off accounts that you may have will remain on your credit report for seven years. You may be thinking, “Ok, I will just wait seven years and then I can wipe my hands clean of that debt.” However, seven years is quite a long time to live without being able to make any kind of purchase that involves a loan or credit check.

What are My Options?

Even though the amount you owe may be a significant chunk of money, it’s always best if you make attempts to pay it back. You can accomplish this by working with an attorney who is experienced in debt resolution. Often, the total amount due can be negotiated down, and a reasonable payment plan can be put into place so that you can pay back the debt as soon as your finances allow. The other option (ignoring the debt and waiting for it to fall off your credit report in seven years) is highly inadvisable, and will undoubtedly affect your future ability to acquire credit, jobs, a place to live, work promotions, insurance, and more.

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Don’t Let Medical Debt Push You into Bankruptcy: Know Your Rights

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The level of medical debt in America has reached crisis levels, and is in fact the top reason that people in American file for bankruptcy. One of the reasons for such extreme amounts of medical debt is that medical bills in the U.S. are often fraught with mistakes. Unfortunately, many times these ‘mistakes’ made by doctors’ billing centers, are in favor of the doctors rather than the patients.

Although there have been some recent changes to the health insurance system in America, there is still a gigantic lack of transparency when it comes to how much you will ultimately be expected to pay out of pocket. This leads to patient confusion. Many times, you may be under the impression that your insurer will pay 100% of the costs related to a medical service, only to later discover that your insurer pays your physician a lower rate than s/he would like to be paid. Often, doctors will attempt to get you to pay the amount (or in some seedy cases, more than the amount) that your insurer did not pay.

This is called balance billing, and is not only frowned upon in New Jersey – it’s illegal. If your medical debt includes any balance bills from doctors, it’s important to know that you are NOT required to pay the balance between what your insurance provider pays and what your physician wishes they would pay. Bring the bill’s attention to your insurance provider – they need to be made aware of any potential insurance fraud practices that may be occurring within your medical network, and they are the best enforcers of the anti-balance billing law.

On the other hand, if you have mountains of medical debt because you’re uninsured, or were uninsured in the past, it’s still quite possible that many of your medical bills contain errors or overcharges. Because there aren’t currently any medical pricing standards in the U.S., it is possible to negotiate your medical bills, both before and after you’ve received treatment.

Almost every medical billing office will work with you to find a payment schedule that works. They essentially want any amount they can get (the more the better, of course), and some is always better than none. If your medical debt is beyond what you can sift through and negotiate on your own, hire someone to do the negotiating for you. Although it may seem counter-intuitive to pay someone when you’re already in debt, your return on investment will be MORE THAN worth it.

A debt negotiator, usually an attorney with a lot of experience negotiating with debt collectors, will be able to so significantly reduce the amount of money you owe, that his/her fee will seem paltry in comparison.

Once your past medical debt is settled, plan for the future. Always ask your medical providers about their fees before you receive services. You can negotiate discounts for yourself, but you have to advocate and speak up! Don’t let overpriced medical bills pile up ever again. Keep yourself out of bankruptcy by knowing all of your options and getting all of your negotiated medical rates in writing.

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Reverse Mortgage vs Home Equity Line of Credit

 

buying a houseAs we have previously talked about on our blog, there are many preconceptions when it comes to reverse mortgages. The basics: if you are age 62 or older and own a home with little to no mortgage payment, you can apply for a ‘reverse mortgage loan.’ You can present the equity in your home to a lender or bank as collateral for them to lend you money – either as a line of credit that you can use as needed, a one-time lump sum, or monthly payments. You can read more about the details of reverse mortgages here.

If a reverse mortgage sounds too good to be true, it’s for good reason. Even the most legitimate reverse mortgage loans come with high interest rates and exorbitant loan fees. Due to the 2008-2009 financial crisis that some financiers have referred to as “worse than the Great Depression,” many seniors have found themselves struggling financially in their golden years. Unfortunately, unscrupulous brokers have preyed upon some of these vulnerable retirees in order to profit from their financial strife.

If you are at least 62 years of age and have found your retirement income lacking, it’s important that you know how to avoid potential scams that could leave you in an even worse financial position. The following situations should send up a red flag:

  • It’s free money! If you receive an advertisement for a reverse mortgage that claims you will qualify for free money, throw the ad in the trash bin recycling container post haste. Reverse mortgages are definitely not free, and any lender who attempts to trick you by omitting important facts about fees and interest is not a lender you should trust.
  • No down payment. Not only are there down payments with reverse mortgages, but they can be quite hefty – sometimes tens of thousands of dollars!
  • Risk free. Some brokers misrepresent the risk involved in a reverse mortgage, which may lead you to believe that you can never lose your home, no matter what. The reality is that a reverse mortgage will become due if you don’t live in the home for 12 consecutive months, or in the event that you fail to pay property taxes or homeowner’s insurance. You must also keep the home and property in good condition. If you fail to meet the requirements of a reverse mortgage agreement, your home will be foreclosed upon, and you will be evicted.
  • Confusing language. If you don’t understand any or all of the information presented to you, do not sign anything. Reverse mortgage loans are notorious for being complicated and using tricky language. It is always in your best interest to seek legal counsel who can review the loan paperwork and translate anything that confuses you.

Because it can be easy to make a reverse mortgage sound like the best thing since sliced bread (and who doesn’t love bread?), many retirees don’t know that they have other options. One such alternative is a HELOC, or Home Equity Line of Credit.

While still using your home’s equity in order to boost your retirement income, HELOCs offer much lower interest rates. There is also no age requirement to apply for a HELOC, and there are no closing costs or loan origination fees. The equity in your home almost never gets depleted, which means your heirs will be able to keep your home without any problems.

Rather than requiring an age upwards of 62, in order to qualify for a Home Equity Line of Credit, you’ll have to have a very good to excellent credit score. You will also make monthly payments on your HELOC, and if you miss payments, you can lose your home to foreclosure.

If you need more information about how to increase your retirement income, seek legal counsel from a NJ attorney who specializes in credit counseling, elder law, or real estate.

 

Image credit: Images of Money

 

 

Is a Reverse Mortgage Right for Me?

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There are a lot of misconceptions about reverse mortgages, and it’s extremely important to have a clear understanding of any type of loan before signing on the dotted line. Based on its name alone, many people don’t even realize that a ‘reverse mortgage’ is a loan at all. In fact, the concept of a reverse mortgage has famously been distorted using tricky advertising in order to scam vulnerable seniors out of large sums of money.

Who qualifies for a reverse mortgage?

In order to apply for a reverse mortgage, you must first be at least 62 years of age. You must also have a mortgage that is completely paid off, or nearly so. If you own your home jointly, the co-owner must also be over the age of 62.

How does a reverse mortgage work?

Retirees who have valuable homes that they paid off during their working years have a decent amount of equity at their fingertips. Home equity is simply how much a home is worth minus any balance owed by the homeowner. For example, the owner of a property that has been appraised at $200,000 has $200,000 worth of equity if they have paid off their mortgage in full. If they still have $10,000 left to pay on the mortgage, they have $190,000 of equity in the home.

A senior who is struggling to make ends meet with their retirement funds alone can essentially ask a lender for a loan using their home equity as collateral. They can receive a lump sum, monthly payments, or a line of credit to use as needed. Generally, reverse mortgage loans aren’t due to be repaid until the borrower dies or moves out of the home. At such time, the lender must be repaid for the amount of equity that was borrowed, plus interest.

Everyone should get a reverse mortgage! Right?

While on the surface it sounds like the perfect solution for struggling retirees, there are quite a few things that make reverse mortgages less than ideal. First and foremost is the fact that this type of loan isn’t based on income or credit scores, which means a higher risk for lenders. Along with higher risk comes an increase in loan origination fees and a higher interest rate than an alternative ‘home equity loan.’

The upfront fees combined with a high interest rate mean that the borrower will see a lot less money. While the equity in any home technically belongs to the homeowner, by ‘cashing in’ early on the equity, a significant heft of it will go to the institution that approves the reverse mortgage loan.

Repayment of this type of loan is triggered when the borrower/homeowner either moves out of the home or dies. Upon moving, the proceeds from the sale of the home are usually enough to pay back the reverse mortgage loan in full. If the homeowner passes away, however, his heirs will have to repay the loan in full if they want to keep the home. Leaving your heirs to pay back money you borrowed can put a strain on family relations among your survivors.

Also, although homeowners who take out a reverse mortgage will not have to make monthly mortgage payments, there are still a lot of other costs related to home ownership. Property taxes, homeowners association fees, property insurance and home maintenance costs will still need to be paid.

The bottom line is that there are other better options for most retirees who find their retirement income falling short of their expenses. Anyone considering a reverse mortgage should do extensive research first, including talking to a credit counseling attorney that they trust. Stay tuned to this space for our next post, where we will talk about the difference between a reverse mortgage and home equity loans, along with how to spot a scam before it’s too late.

 

 Image credit: Images of Money