78 Million Baby Boomers Will Strain Social Security

9/27/2007

posted by N. Sioris

Stumble It!

A recent report issued by the Treasury Department said that Social Security is facing a $13.6 Trillion dollar shortfall. The shortfall is the gap between what Social Security is expected to pay out in benefits and what it will raise in payroll taxes.

Delaying reforms to the Social Security entitlement program would be unfair to future generations. The Treasury Department said that a combination of benefit cuts and tax increases will need to be considered to permanently fix the funding shortfall. With the looming retirement of 78 million baby boomers - born between 1946 and 1964, the pressure is on for Congress to take some serious steps that likely will not be well received by many Americans.

With the uncertainty of Social Security more retirees than ever, will have to take the majority of the responsibility for funding their own income during their golden years. One way to do that is through the use of a Reverse Mortgage. That however, assumes that you have a large amount of equity built up in your home. If you have used your home as an ATM machine or refinanced your home and pulled out equity during this last housing boom, you may be out of luck on qualifying for a Reverse Mortgage.

But, if you do have considerable equity in your home, you may want to find out if you qualify for a Reverse Mortgage. All persons on the title must be at least 62 years old. If you qualify, you can tap into your home equity in a number of ways: A lump sum amount of money given to you, a line of credit to be used as needed, a fixed monthly amount given to you as income, or a combination of these.

No repayment is required on a Reverse Mortgage until you permanently leave the home. At that time the Reverse Mortgage must be repaid through either the sale of the home or a refinance mortgage to pay off the Reverse Mortgage.

You Still Own Your Home When You Get A Reverse Mortgage

9/19/2007

posted by N. Sioris

Stumble It!

One of the most pervasive misconceptions about Reverse Mortgages is that the senior no longer owns their home. This could not be further from the truth.

Working in this industry for some time now, it still amazes me that so many people think that they no longer have the ability to leave their home to their heirs, if they take out a reverse mortgage. Or they are under the misconception that if their heirs would like to keep the house, then the heirs have to "buy back" the house from the lender. Again, this is not the case. The lender does not own your home if you take out a reverse mortgage.

Here is what happens: If you take out a reverse mortgage, you are still the owner of your home. Your name remains on the title. The lender has a mortgage lien on your property in the same way that a mortgage lender does on a traditional forward mortgage. When you pass away or permanently leave your home, the reverse mortgage must be repaid. (Just the same as if you passed away with a regular conventional mortgage on your home).

If you have left the home to your heirs as part of your estate, they have two choices. They can either keep the home or sell the home.

If they keep the home, they must pay off the reverse mortgage lender by getting a new traditional mortgage, or they can pay off the reverse mortgage lender with other assets that they may have. If they sell the home, then they can pay off the reverse mortgage lender from the sale proceeds of the home.

If there is more value in the home than what is owed to the reverse mortgage lender, then the heirs get the extra money. If the reverse mortgage balance is greater than what the home can be sold for, the reverse mortgage lender settles for the amount of the sale. Your heirs are not liable for any shortfall if the house is worth less than what is owed on the reverse mortgage.

Myths and misconceptions about Reverse Mortgages are often the reasons why people reject the very idea of looking into a reverse mortgage in the first place. You owe it to yourself to find out the facts before jumping to a conclusion that a reverse mortgage is a bad idea.