Show #375 Airing Sunday, 2/18/07
Sometimes, we just need cash. Maybe it's to cover expenses. Or perhaps it's to buy insurance protection. But where can we get cash if the bank account is bare? Here to let us cash in on his knowledge is my partner, Michael Solomon.
Question:So you're going to tell how us how to get cash when there's no balance in the bank. I know you're a good lawyer, but now you're a magician?
Answer: No, just a good lawyer. Lots of folks could use extra cash, especially as they get older. But if they own a home, they may be able to tap the home equity for the cash they need, with a reverse mortgage.
Question: How's a reverse mortgage work?
Answer: You can get a loan, either one lump sum or smaller monthly payments for life. And unlike a regular loan, it doesn't have to be paid back until you die or sell the home.
Question: How can older people benefit from a reverse mortgage?
Answer: There are lots of possible benefits. Many older people live on fixed incomes. But expenses aren't fixed. The cost of utilities, homeowners insurance and taxes keep going up. And there are costs for food, clothing, and medical care. A reverse mortgage provides the chance to add to your income without worrying about repaying the loan during your lifetime.
Question: What are some other ways people can use a reverse mortgage?
Answer: We've talked on the show about Medicaid for long term care. And we've explained how complicated the program has become.
One alternative, if you plan ahead, is long-term care insurance. But it can be expensive. Where will you get the cash to buy it?
One often-overlooked source is your home equity. You may take a reverse mortgage that gives you a monthly payment. Then you may use that added income to protect your financial security by using it to purchase long term care insurance!
Question:You mentioned long term care insurance. What about life insurance?
Answer:There may be times that taking a lump sum from a reverse mortgage might help buy a needed life insurance policy. Let's say, for example, your estate may be taxed at death. If your estate doesn't have enough cash to pay the tax, your heirs might have to sell off assets like real estate or a family farm or business. You may be able to avoid that problem by taking a reverse mortgage, using the funds to buy life insurance. At your death, the insurance provides cash to cover your taxes and other expenses.
Question: How can our viewers learn more?
Answer: Wells Fargo, which is the largest reverse mortgage lender, is putting on free information programs in the area. You can call Mark King at 440-801-3414 for more information.
If you're "forward thinking", a "reverse" mortgage can protect your financial security. My thanks to Mike Solomon.
