NY Times Tells Us Why You Should Not Expect an Inheritance

image Reverse Mortgages gets a nice mention in the NY Times article 8 Reasons You Should Not Expect an Inheritance article published over the weekend.  The article discusses why many children shouldn’t be expecting any sort of inheritance from their parents.

Below is a snapshot the reverse mortgage mention:

It’s getting easier to drain a home’s equity. Homeowners who are 62 or older (though there are some exceptions) can take out a reverse mortgage, which is roughly akin to a home equity loan that you don’t have to pay back until you (or your heirs) sell the house. So homeowners can tap the equity in their homes without having to make monthly payments to repay the debt.

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So far, borrowers have taken out roughly 450,000 of these loans since 1990, according to the National Reverse Mortgage Lenders Association. But the pace is picking up. Lenders, including mainstream operations like Bank of America and Wells Fargo, wrote more than 100,000 of them for the first time in the year ended Sept. 30, 2007.

Meanwhile, the association says, retirees are increasingly using mortgages as a financial tool — and not simply as a last resort to pay for health care emergencies and the like.

Indeed, there is nothing to stop people from using the loan proceeds for vacations or cars or whatever they want. Millions just may do that someday, which makes reverse mortgages a real wild card. Their growth certainly raises the likelihood that large portions of family homesteads in America will end up belonging to banks, not heirs.

To read a copy of the entire article click the link below.

8 Reasons You Should Not Expect an Inheritance (NY Times)

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  • The article “8 Reasons You Should not expect an Inheritance” mentions homesteads belonging to banks. To my knowledge, banks don’t want to own homes. I could be way off base with this thought but banks want to be paid back for the use of their money plus interest. Not; get a homestead or say a condo (with all the deed restrictions and dues that go with said condos). That being said many children (adults) that want the family goodies but may not want-or be able to pay for the additional medical needs of mom and dad can’t understand why they aren’t getting the family STUFF with out any liens attached. Now a days your very lucky if you or your parents or the family as a whole can meet the needs of loved ones who are living longer and paying the bills that allow for living longer. Unfortunetly most of us (no matter how much we love our parents)are just not in a situation where money is no object. That is a fact. The reverse mortgage gives seniors the ability to choose where they want to be and ya know what it, may not be what the KIDS want but do the KIDS really understand what goes into taking care of, paying for, or monitoring the health and financial life of their parents? Maybe they should take out a Long Term Care Policy for Mom and Dad make those payments for the rest of mom and dads life and that way the family home wouldn’t come into question. Last time I checked it was well over $200 per person (monthly) and I don’t think that included full nursing care. But hey, I could be wrong.

  • Reverse mortgages are good and if used correctly can benefit many clients. There are however situations where a reverse cannot be used. For instance if the elderly person wishes to use a second home or investment property as collateral, or they own a commercial property and wish to utilize it to do a reverse.

    Good news there are alternatives to reverse mortgages that can be utilized on all most any real property a senior may own. This product is not a loan and is not a mortgage. the web site for this program which is offerd in New York is http://www.ReverseMortgage Alternative.org.

    John

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