Financial Options for Seniors with Harlan Accola

Apr 8, 2024

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Why do reverse mortgages still have a bit of a PR problem?

Many people are not aware that federal regulations were put in place in 1988 to address issues with the product and protect consumers. However, some bad players still gave the product a bad reputation by taking advantage of vulnerable seniors in the past.

Now there are new laws and safeguards by the FHA for widows to be protected and financial assessments to assure someone can afford taxes and maintenance which are recent within the last 10 years or so to eliminate problems in the program.

How is a HECM (Home Equity Conversion Mortgage) reverse mortgage similar to a Swiss Army knife?

There are so many different ways to use them. Just like a Swiss army knife has multiple tools, reverse mortgages can be used for various purposes beyond just being a loan of last resort.

This is in contrast to many people's perception that reverse mortgages are only designed for people who are broke.

How can a reverse mortgage help keep your Medicare premiums low?

A reverse mortgage can help keep Medicare premiums low because the money received from a reverse mortgage is not considered taxable income. It does not generate a 1099 or W-2 form like withdrawing money from other retirement accounts might.

Since the reverse mortgage funds are not reported as income, it does not count towards calculating the "IRMAA (Income-Related Monthly Adjustment Amount)" that can cause Medicare premiums to increase substantially for some seniors. Taking money from a reverse mortgage avoids this unexpected Medicare premium increase.

How could a reverse mortgage help with Long-Term Care?

It can provide funds to keep long-term care insurance policies in force if rising premiums would otherwise cause someone to cancel their policy when they may need it.
It can be used as a line of credit that seniors can tap into in the future to pay for long-term care costs like home care, rather than being forced to move to a more expensive nursing home.
Harlan's parents were able to use funds from their reverse mortgage to pay for home care so his mother with Alzheimer's could stay at home, which was better for her condition, rather than moving to a nursing home.

Can a reverse mortgage actually keep you in your house?

Yes! A reverse mortgage can help keep seniors in their homes. While paying off a mortgage eliminates the monthly principal and interest payment, homeowners still have costs like property taxes, insurance, maintenance, and homeowners association fees that increase over time.

A reverse mortgage can provide funds to pay these ongoing costs and allow seniors to stay in their homes rather than feeling pressure to sell and move to a less expensive area, which may involve capital gains taxes. The equity in their home can be used to cover rising costs and keep seniors in the place they want to live.

How can people get more information?

Movement.com/Faith
Email them directly at reverserequest@movement.com

On Today’s Program, Rob Answers Listener Questions:

I have a retirement plan through my workplace but I also have a 401(k) that has about $70,000 in it. I haven’t contributed to that for the past three years but I’m just wondering what I should do with that? Should I just leave it there and never touch it or should I move it?
My mother left a home to my sister and I and it was a Quitclaim deed that was written up about 30 years ago and never changed. My family needs the equity out of this home because I still have a mortgage on my house, a car that’s dying, and kids that are in college. I’m trying to find a way to pull the equity out of this house but since my sister and I own it together, I’m not sure how to do that. I’d hate to force a sale and cause them to move out.

Resources Mentioned:

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