Blogs in Real Estate

Many seniors do not have enough assets and equity to get along with their daily lives, especially in today’s economic climate.  Because of this, it seems to be common for people to bypass the assistance of a Certified Financial Planner in NJ, a Philadelphia private wealth management firm, or even a New Jersey financial planner, in order to come up with the best way they can see to get money: a reverse mortgage.  While this may be the best move for some people, it is important to at the least consult a financial planning guide when making this decision.

“For many seniors the equity in their home is their largest single asset, yet it is unavailable to use unless they use a conventional home-equity loan. But a conventional loan really doesn’t free up the equity because the money has to be paid back with interest.

A reverse mortgage is a risk-free way of tapping into home equity without creating monthly payments and without requiring the money to be paid back during a person’s lifetime. Instead of making payments the cash flow is reversed and the senior receives payments from the bank. Thus the title “reverse mortgage”.

Many seniors are finding they can use a reverse mortgage to pay off an existing conventional mortgage, to create money for a down payment for a second home or to pay off debt. Popularity is skyrocketing. Over the last five years the number of reverse mortgages nationwide has tripled. The uses of this untapped wealth are only limited by a person’s imagination.

For those seniors who earn low incomes but own a home, a reverse mortgage can allow them to remain in the home by creating extra income. It can also allow for remodeling or repairs and when the time comes to sell, the investment in the home can make it more valuable.

False Beliefs about Reverse Mortgages

“The lender could take my house.” The homeowner retains full ownership. The Reverse Mortgage is just like any other mortgage; you own the title and the bank holds a lien. You can pay it off anytime you like.

“I can be thrown out of my own home.” Homeowners can stay in the home as long as they live, with no payment requirement.

“I could end up owing more than my house is worth.” The homeowner can never owe more than the value of the home at the time the loan is due.

“My heirs will be against it.” Experience demonstrates heirs are in favor of Reverse Mortgages.

Virtually anyone can qualify. You must be at least 62, own and live in, as a primary residence, a home [1-4 family residence, condominium, co-op, permanent mobile home, or manufactured home] in order to qualify for a reverse mortgage.

There are no income, asset or credit requirements. It is the easiest loan to qualify for.

A reverse mortgage is similar to a conventional mortgage. As an example:

• The bank does not own the home but owns a lien on the property just as with any other mortgage
• You continue to hold title to the property as with any other mortgage
• The bank has no recourse to demand payment from any family member if there is not enough equity to cover paying off the loan
• There is no penalty to pay off the mortgage early
• When the loan becomes due, you can refinance and keep the house.

The proceeds from a reverse mortgage are tax-free and can be used for any legal purpose you wish:

• daily living expenses
• home repairs and improvements
• medical bills and prescription drugs
• pay-off of existing debts
• education, travel
• long-term care and/or long-term care insurance
• financial and estate tax plans
• gifts and trusts
• to purchase life insurance
• or any other needs you may have.

The amount of reverse mortgage benefit for which you may qualify, will depend on

1. your age at the time you apply for the loan,
2. the reverse mortgage program you choose,
3. the value of your home, current interest rates,
4. and for some products, where you live.”

Making this decision will be one of the largest that will be made in one’s life, financially of course.  Because of the gravity of the decision, it is important to find a financial advisor to make sure it is the right choice.

It is often difficult for people to understand what usually serves as the impetus for financial decisions they make because these choices are a product of internal factors, not just external market factors.  While the use of a Certified financial planner in Philadelphia, an NJ private wealth management firm, or a New Jersey wealth management group will help, a major component in decision making is still a person’s financial DNA.

“Your financial DNA is your evolution from your natural behavior through the learned behaviors that you have.

It’s vital to your success, your wealth, and your overall happiness.

In fact wealth is just not confined to money. No wealth is much more than that. Wealth also includes your health, love and support of friends and family, knowledge, as well as the education you have. Wealth does not start and end with money. It ranges and covers the entire spectrum.

That is why it is important not to let money center around your life. The moment money becomes priority number one and the only true priority you think about, disaster strikes.

Today financial advisors are catching on, and making their business much more personal than it once was. The evolution has created a financial advisor that can serve as much as a family facilitator and relationship counselor as an actual advisor that handles and makes suggestions for your investments.

The ultimate goal of a financial advisor is to create an environment that will allow the individual to live their dreams and incorporate everything into they life that they desire.

In the end, it’s necessary to balance life and money equally. The purpose of financial planning is to address that exact need.

Part of your financial DNA includes finding out and discovering the real you. Who you are, what makes you tick, and what dreams and goals you have for your life. A personality assessment is vital into understanding your financial DNA.

Your financial DNA also includes your personal relationships. Both family and business relationships can help control and shape the person that you are. Communication is the most important key to a healthy relationship regardless of whether its business orientated or not.

You cannot blame all broken relationships on money. While it’s easy to point the finger at finances, the reality is that lack of communication is usually the primary reason.

You need to understand and accept that your personal financial DNA is highly important to a successful future. Obtain and keep a healthy communication link between your business partners, family and friends, as well as your financial advisor.

Know your financial DNA.”

By understanding this, investors can realize that when trying to find a financial advisor, it is not their perspective that will pull the trigger on a decision.  Using a financial planning guide may be another safe bet in investing as it will aid, but not cause a stark contrast to their opinion, which will automatically result in a decision for them.