MN Estate Plan and Reverse Mortgages

When you see a TV ad with a famous older actor telling you that a reverse mortgage might solve all of your current financial problems, its tempting to believe everything you hear. However, its never wise to immediately pursue this type of loan before carefully considering how it might affect your overall MN estate plan.

Instead of immediately requesting the free application and other forms being advertised, give serious thought to first contacting your Minnesota estate planning attorney. Hell be able to personally explain to you how some of these loans often back-fire on trusting seniors.

Definition of a Reverse Mortgage; Also, a Key Internet Resource for Learning More

One of the best resources for learning all about these types of mortgages is the Minnesota Attorney General website. There youll learn that reverse mortgage companies loan you money based on the equity you have built up in your home. Stated differently, what they do is convert the equity you currently have in your home into a cash payment.

Please continue reading below to learn more about some of the pitfalls that unsuspecting consumers can face when they sign these types of contracts.

What Every Senior Age 62 or Older Needs to Know About Reverse Mortgages

Some companies use these loans to take advantage of seniors. According to our state government, those who market these mortgages have turned this into a $20 billion industry. Far too often, homeowners who sign up for these special mortgages wind up going much further into debt than they ever imagined was even possible;
There are several different types of reverse mortgages. There are Home Equity Conversion Mortgages these are federally insured by the U. S. Department of Housing and Urban Development. There are also many private companies that sell private reverse mortgages and there are government agencies or nonprofits that sell single purpose reverse mortgages. Youll need your lawyers help to decide if any of these might prove useful to you in the long run, in light of your current circumstances;
Dont believe any ad urging you to hurry and sign up so youll soon receive a big check in the mail. In fact, there are often large up front origination fees and closing costs that YOU must pay before you ever receive any money or cash from the lending company;
Reverse mortgages do often let you live in your home until your death –— if youre lucky. You see, since youre still living in the house and are the legal owner, youll still need to personally pay all annual property taxes, home insurance, and necessary repairs while living there. If bad things happen regarding your health a common event for many seniors — you may not be able to keep up with all of these expenses. This could cause you to lose your home and have no place to live under a worst case scenario;
When you pass away, your estate or heirs may owe quite a bit of money on your home. If youre determined to leave your house to your children or others, you may want to steer clear of this type of loan. After all, a number of unexpected events or expenses could prevent this gift from being made after youre gone.

Of course, there are some people who believe that reverse mortgages can help seniors. In fact, if you may have enough other investments and assets, this type of loan could help you. Just respect your future well-being and happiness enough to fully consider all of your options with your lawyer and financial advisor before ever obtaining a reverse mortgage.