Your home is probably your most significant investment. Many people who have paid off their mortgage decide to take out a reverse mortgage to provide additional income during their retirement years. Before you sign to take out a loan against the equity in your home, it’s always a smart idea to consult an estate planning attorney to discuss how a reverse mortgage will affect any wills and trusts you have in place. And, to be sure the terms of the reverse mortgage are not deceptive, misleading or coercive forms of elder financial abuse.
A reverse mortgage allows eligible homeowners to use the equity in their home to borrow money in either a lump sum, receive payments or a combination of both. But, unlike home equity loans or lines of credit, a reverse mortgage is not paid back until one of the following happens:
• The homeowner moves out
• Sells the home
• Passes away
Not every homeowner is eligible for a reverse mortgage. Some requirements must be met. The homeowner must:
• Be at least 62 years old
• Live in the home as their principal residence
• Have the mortgage completely or almost paid off
• Not be delinquent on any federal debt
• Must be willing to keep the house in good and livable condition
• Must be able to have and pay for home insurance, property taxes, maintenance, upkeep and repairs
Before signing any reverse mortgage documents, you should always consult an estate planning attorney.
There are pros and cons to every reverse mortgage. Speaking with an estate planning attorney will help you decide what is best in your unique situation. They will go over the specific details with you to understand what is required and when the loan is due.
There are options to consider when deciding on a reverse mortgage. Understanding why you want the loan will guide you in the best possible course of action. Take your estate plan into account before deciding to continue. An experienced estate planning lawyer will ensure your reverse mortgage does not conflict with the information listed in your will or trust and how it might impact your estate plan.
It’s smart to consult an estate planning attorney if you inherit a home that has a reverse mortgage. They will help determine if the homeowner had a mortgage protection insurance policy.
If you have questions about a reverse mortgage and how it might affect your will or trust, please contact us to schedule a free consultation. To learn how an estate planning lawyer could help you, call us for a consultation at 630-864-5835.
Areas we serve: Cook, DuPage, Kane, Lake and Will counties.