Globe Syndicate
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release
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by Carol Abaya, M.A.
REVERSE MORTGAGES ARE GOOD -- and BAD
Question: My parents,
late 60s, want to travel. In order to do
this, they want to take out a reverse mortgage on their home. What is a reverse mortgage? Is this a good idea?
Answer: In this
particular situation, a reverse mortgage is NOT a good idea. Your parents are still very young. As a passionate traveler myself, I can understand
their desire to see new places and have new experiences.
However,
if your parents really want to travel, there are affordable trips through Elder
Hostel and other organizations.
If
income is very limited, cashing in other assets is better. If they have no or few other assets, they may
have to be satisfied with “arm chair” travels.
Many colleges have travel programs and trips that are affordable.
The
house is probably your parents’ biggest asset and should be protected unless a
person is really sick/dying and/or elderly.
Once you take out a reverse mortgage, you lose control and cannot sell
the house.
A
reverse mortgage is really what the name implies. In a regular mortgage, the homeowner pays the
mortgage holder money each month. In a
reverse mortgage, the bank or mortgage company pays the homeowner a set amount
of money each month.
When
the homeowner dies, the mortgage holder gets the house and sells the house to
get back the money paid to the homeowner.
Question: My mother, 82,
is healthy and wants to stay in her own home rather than move in with us. Her income is limited, and the house needs
some major repairs. What is a reverse
mortgage? Would it be good for her?
Answer: Given your mother’s age,
a reverse mortgage could be a good idea.
However, in light of her limited income, there are other resources to
help pay for the repairs.
It may
take a number of telephone calls to hook up with the right agency in your area
that has HUD grant funding. Calls to
your local office on aging and the state department on housing can provide
valuable information. I also understand
that some large home improvement chains help people like your mother and may
also have connections with governmental agencies.
There are various ways to
help reduce monthly expenses. There are
special rates from utility companies, a reduction in property real estate
taxes, food stamps, Meals on Wheels, senior transportation programs, to name a
few.
Reverse Mortgage Cautions: As with any financial vehicle geared to those
with limited income and who may be financially vulnerable and unsophisticated,
a reverse mortgage can be a disaster and even a scam.
DO NOT get a reverse mortgage from a company that promises the world. Or advertises one thing and then the representative gives you other information when you call. Talk with your local bank manager, and if the bank does not give reverse mortgages, ask for a referral to a legitimate and reputable mortgage company.
Are you juggling doing errands for your aging parents, your children, yourself and working at the same time? Are you tired, stressed out and upset that your once vibrant parent is now frail and needy?
Do you feel alone? Rest assured you are not alone! The Sandwich Generation is dedicated to the 50 million Americans who may have elder/parent care concerns and/or responsibilities.
* * *
Do
you have a question? Send it in. Although letters cannot be answered
individually, appropriate letters will be answered in this column whenever
possible. Letters may be edited. Send letters to Ms. Carol Abaya,
mail direct to her at
Carol Abaya is an international-award-winning journalist and creator of the unique magazine The Sandwich Generation: You & Your Aging Parents.
NOTES TO EDITORS: text = 553 words; other material = 160 words
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