Expert Retirement Planning

ExpertRetirmentPlanning.com interviewed expert mortgage consultant Jamie Frampton, with Mortgage Team One about how reverse mortgages can play a role in retirement planning. Frampton has completed extensive training on reverse mortgages and is licensed in Alabama, Mississippi, and Florida.

1. What is a reverse mortgage?

A reverse mortgage is a way for homeowners who are 62 or over to access equity they have in their homes. It is a loan against your home that you do not have to pay back for as long as you live in the home. You will still have ownership in your home throughout the entire term of the loan. A reverse mortgage can help you access cash based on the value of your home without you having to make monthly payments and can help you better manage your financial future. You can even arrange to receive monthly payments if you have adequate equity.

2. How can a reverse mortgage help with achieving retirement planning goals?

The proceeds from a reverse mortgage can be used for anything, whether its to supplement or replace lost income to cover daily living expenses, repair or modify your home, pay for health care, pay off existing debts, buy a new car or take a "dream" vacation, cover property taxes, and prevent foreclosure-It really can be used for anything the borrower wishes to use it for.
3 .Who will benefit from a reverse mortgage?

Any person who is over the age of 62 and owns their home. It is not necessary to own the home outright. We can use the new loan to payoff any existing loans. Many of the factors that play in with typical mortgages have no impact on ones ability to qualify for a reverse mortgage. For example, credit, health, and income do not matter.

4. What are the implications of reverse mortgages for the baby boomer population members faced with caring for elderly parents and approaching retirement age themselves?

A Reverse mortgage is an excellent program for the upcoming baby Boomer population. I think that it is a wonderful program that the entire population should be educated on. Each person will benefit in a different way depending on age, value of the property and situation. Children should be encouraged to attend the mandatory education class with their parents if they are a participant in their financial planning.

5. Will getting a reverse mortgage impact government retirement benefits such as social security or medicare?

A reverse mortgage does not affect regular Social Security or Medicare benefits. However, if you are on Medicaid, any reverse mortgage proceeds that you receive must be used immediately. Funds that you retain would count as an asset and could impact Medicaid eligibility. For example, if you receive $4,000 in a lump sum for home repairs and spend it all the same calendar month, everything is fine. Any residual funds remaining in your bank account the following month would count as an asset. If the total liquid resources (including other bank funds and savings bonds) exceed $2,000 for an individual or $3,000 for a couple, you would be ineligible for Medicaid.