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Archive for the ‘Asset Preservation’ Category

Once you’ve made the decision to apply for a Reverse Mortgage, you should prepare yourself by fully understanding what a Reverse Mortgage entails and how the process works.

Seniors aged 62 and older are entitled to mortgage their home under a federally-insured Home Equity Conversion Mortgage plan. This HECM mortgage, also called a “Reverse Mortgage,” allows the borrower to convert their home’s equity into a tax-free payment while they retain ownership of their home. The loan is repaid when the borrower no longer lives in the home, at which point the ownership of the house reverts to the lending institution. The lending institution then sells the property and recoups funds. Even if the value of the house declines, the borrower is not liable for the difference between the value of the loan that he received and the value of the house at the time that the bank takes possession.

Draw Options

The Federal Housing Authoritycaps the HECM maximum lending limit at $625,500. Reverse Mortgage borrowers have their choice of draw options. These options include taking the money as a lump sum cash payment, obtaining the funds as a line of credit or signing up to receive monthly payments. It is also possible combine these three alternatives when signing up for the preferred draw option. Borrowers should be aware that the monthly payment alternative offers varying monthly sums, with higher monthly sums available for older seniors. For this reason, Reverse Mortgage advisors suggest that seniors try to wait a few years beyond age 62 before they apply for a Reverse Mortgage.

Each individual borrower should consider his or her financial reasons for taking out a HECM loan when deciding on the method of payment. Many financial counselors suggest that seniors use a Reverse Mortgage to pay off a significant credit card debt, thus saving the credit card interest charges. In such a case, the borrowers will want a full or partial lump sum payment. In other cases, seniors who are having difficulties meeting monthly expenses on their retirement budgets will want to consider a line of credit or the monthly payment option.

Responsibilities

As part of the Reverse Mortgage contract, borrowers agree to continue the regular property tax payments on their home and maintain the home’s upkeep. In addition, borrowers are liable for the loan’s processingfees and must pay the loan’s interest costs. Lending institutions allow Reverse Mortgage borrowers to pay off these fees by subtracting them from the loan’s total payment.

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Did you know that people who work with a financial professional fare better in retirement than those who don’t?
Recent surveys and studies indicate:

  • People who work with a financial professional have a median retirement asset value of $78,000
  • People who don’t work with a financial professional have a median retirement asset value of $28,000
  • 40% of people who do not work with a financial professional say they will need to work in retirement.
  • Only 29% of people who do work with a financial professional say they will need to work in retirement.

In addition, the study also found that half of all women who work with a financial professional generally feel more empowered and financially secure. These women also tend to feel more optimistic about their financial futures and are more apt to teach their children about money.

Why do you need a financial professional?

Do any of these statements resonate with you?

  • I’m confused about conflicting financial guidance
  • I’m anticipating a life change that will affect my finances
  • I’m hoping for a better financial performance from my investments, yet I’m afraid the financial risks
  • I’m unprepared to leave behind my legacy

If one or more of the above statements apply to your situation, you may benefit from the services of a financial professional.
So, why aren’t you working with a financial professional?

Among the most common reasons people don’t work with a financial professional are:

* I’ve never considered it
* I don’t have enough money
* I don’t trust them
* I’m embarrassed about my financial situation
* I don’t know enough about finances

Do any of these responses sound familiar? As you can see, you are not alone when it comes to the reasons why you may not be working with a financial professional.
Find out if working with a financial professional is for you.

There is no time like the present to work towards a better financial future. Working with a financial professional now can help you build a better financial future.

email: Rick Curtis

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An annuity is a contract between you and an insurance company, under which you make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date. Annuities typically offer tax-deferred growth of earnings and may include a death benefit that will pay your beneficiary a guaranteed minimum amount, such as your total purchase payments.

There are generally two types of annuities—fixed and variable. In a fixed annuity, the insurance company guarantees that you will earn a minimum rate of interest during the time that your account is growing. The insurance company also guarantees that the periodic payments will be a guaranteed amount per dollar in your account. These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.

In a variable annuity, by contrast, you can choose to invest your purchase payments from among a range of different investment options, typically mutual funds. The rate of return on your purchase payments, and the amount of the periodic payments you will eventually receive, will vary depending on the performance of the investment options you have selected.

An equity-indexed annuity is a special type of annuity. During the accumulation period – when you make either a lump sum payment or a series of payments – the insurance company credits you with a return that is based on changes in an equity index, such as the S&P 500 Composite Stock Price Index. The insurance company typically guarantees a minimum return. Guaranteed minimum return rates vary. After the accumulation period, the insurance company will make periodic payments to you under the terms of your contract, unless you choose to receive your contract value in a lump sum.

Variable annuities are securities regulated by the SEC. Fixed annuities are not securities and are not regulated by the SEC. Equity-indexed annuities combine features of traditional insurance products (guaranteed minimum return) and traditional securities (return linked to equity markets). Depending on the mix of features, an equity-indexed annuity may or may not be a security. The typical equity-indexed annuity is not registered with the SEC.
-email: Rick Curtis

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