Helping Your Parents Enjoy Their Retirement Years

Many senior homeowners are living in highly valued homes and yet, are finding it harder each year to remain confident in their financial security. Costs for food, taxes, utility bills, medical treatments and prescriptions always seem to be rising, and many seniors, are struggling more and more each year to make ends meet. This is certainly not the retirement life you had hoped for them… and it need not stay that way.

Your parents made an investment that has increased in value far beyond anyone’s expectations – their home. Typically, their goal is to leave this asset to you, their children, and they may even compromise their own lifestyle and well being in an attempt to do so. The reality is that they can regain financial freedom and still leave a substantial legacy, if you help them to understand their options.

There are special lending programs available exclusively to homeowners, age 62 years and older, called reverse mortgages. These programs allow them to tap into a portion of their home value so that they can:

- afford to stay in their community
- maintain their quality of life
- provide for their families’ needs and obligations
- have the ability to strengthen their financial future
- simply rest easier knowing that they have access to a monetary resource if necessary

A reverse mortgage can only be made on a primary residence. Your parents retain full ownership of the property. There are no mandatory monthly repayments for as long as they live in their home (although they can re-pay any portion of the interest or principal at any time with no penalty). If and when they decide to sell, any value in excess of the loan payoff amount belongs to them (In the case of an estate sale, the same is true, with the balance credited to the estate).

The proceeds from a reverse mortgage are tax-free and are not considered income by the IRS (therefore they do not interfere with any entitlement benefits your parents may be receiving). The funds are available as a lump sum, fixed monthly payments, a line-of-credit, or as any combination of these three options. The funds can be utilized for - daily living expenses, home improvements and repairs, property taxes and home-owner’s insurance, prescriptions and medical bills, credit cards payoffs, financial and/or estate plans, long-term care Insurance, funding gifts and trusts, vacations, or anything else they desire.

Additionally, a reverse mortgage is the easiest loan for which to apply because, unlike traditional mortgages or home equity loans, there are no income, asset or credit requirements to qualify.

Reverse mortgage programs enable your parents, as senior homeowners who are house rich, but short cash, to utilize some of the excessive appreciation that has accumulated in their home and still leave plenty of assets to their beneficiaries in the future.