Many seniors turn to reverse mortgages to supplement their retirement income. Whether you have a low or high net worth, it’s a good idea to talk with an estate planner before applying for a reverse home loan.

What Is Estate Planning?

An estate plan helps to protect your assets. You decide what happens to your property. If it’s important that your wishes are followed after you die, then you need to have an estate plan. The basics of an estate plan include:

• A will, which designates who you want to receive your assets. If don’t have a will when you die, it’s called dying intestate, and you have no control over who gets what. Your estate must then be settled through the probate process, which can be pretty costly and time-consuming in some cases.
• A durable power of attorney, which names an individual who is responsible for making decisions if you become incapacitated.
• A living will or advance directive, which designates what you want done in terms of medical treatment if you are unable to make those decisions.

Reverse Mortgage Pros and Cons

For many people, their largest asset is their home. An estate planner can help look at your overall financial picture to see if it’s a good idea to borrow with a reverse loan. On the plus side, getting a reverse mortgage can allow you to pay for medical bills, retire debt, or make home improvements. You don’t need a credit check to qualify and the money you receive is tax-free.

On the downside, reverse home loans can be expensive if you don’t need a large amount of money, because the fees are based on your home’s value. Also, with a reverse mortgage, heirs receive less property when you die. You also have to pay back a reverse mortgage if you move to another residence.

Reverse mortgages can be helpful. But don’t rush into a reverse loan without looking at the big picture for your estate.

This entry was posted on Monday, December 7th, 2009 at 12:41 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.