Retirement planning can be challenging because it involves making projections about things that will be taking place well into the future. No one has a crystal ball so this is certainly an imperfect science. The financial crisis of 2008 offers a good example of how circumstances that are out of your control can have a significant impact on your retirement plan. Many people who planned carefully for decades found themselves in an unexpected position in the wake of the sub-prime crisis and subsequent Wall Street debacle.
One thing that is certain when you are planning for your retirement is that it is important to be aware of all of your options. Should you find yourself in need of liquidity during your golden years you might want to consider a home equity conversion mortgage. These reverse mortgages are insured by the federal government, so you know that they are legitimate. In fact, borrowers must complete a counseling session that is approved by the United States Department of Housing and Urban Development before they can close on a HECM.
Since you are receiving payments rather than making them there are no credit or income requirements.To qualify for a home equity conversion mortgage you must be at least 62 years of age and own your home outright or have a significant amount of equity in the home. Though you can’t be foreclosed upon because you’re not making payments you are required to keep the home in reasonable condition and keep the property tax payments current, and if you were to fail to do so the loan could be called in.
The loan becomes due when you pass away or choose to move from the home voluntarily. You or your heirs could then sell the home, satisfy the debt, and keep any remainder that may exist. However, this is not required; if you want to you can pay off the debt using another source of funding and keep the home.
John Kuhn, Estate Planning Attorney
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