COLUMN: Live well, leave nothing

One of the wealthiest groups of Americans is the AARP crowd, those of us who have earned every gray hair and are enjoying the benefits of senior discounts.

I know, a lot of us out there aren't exactly wealthy cashwise, but we are wealthy equitywise. We own our homes, but are scratching to pay the bills while living on Social Security.

It's time to turn that equity into cash with a reverse mortgage.

It's a great deal. With a reverse mortgage, the payment is to you, based on actuarial tables. Say the figures show you will live to be 75 and payments are made to you based on that age. If you live to be 90, that reverse mortgage still pays, long after the equity is gone.

Every older American who is having trouble making ends meet and owns a home should look into reverse mortgages. Here are more reasons:

--No income requirements (your payment is based on the value of your home).

--The money is tax free (this is money on which you paid taxes years ago).

--No monthly payments (in fact, the money is paid to you).

If you move or the home passes to your estate, the amount due cannot exceed the value of your home.

And, once you get that reverse mortgage, that's not the end of the road. Should the interest rate drop or the value of your home appreciate, you can return to the lender and "refinance." Another plus: if you don't have the cash to pay for upfront fees, they can be taken out of the equity.

There are two ways to take the benefits: lump sum or monthly. Should you take a lump sum, the interest starts immediately; if it's taken monthly, the interest accrues. (That's also the one where they have to pay you as long as you live. I have a warped sense of humor, so that really appeals to me.)

The maximum amount a homeowner can borrow for a reverse mortgage is based upon the borrower's age, the property's value and the interest rate. A borrower cannot be forced to sell or vacate the property to pay off the loan as long as the home is kept in good repair and taxes and insurance are paid on a timely basis.

To help prevent fraud and abuse, reverse mortgage lenders who deliver loans to Fannie Mae are instructed to make the check payable to the borrower and no other third party to ensure the senior is able to receive the intended benefit from the reverse mortgage. Borrowers also may choose to have the funds sent to their accounts through a wire transfer.

A reverse mortgage recipient retains full ownership of the home. The plan is available to anyone over the age of 62 who owns a home. The mortgage holder cannot foreclose on the property. And last, but not least, the homeowner can never owe more than the value of the home.

So, when the homeowner decides it's time to move to a managed care facility or in with a relative, it's possible to sell the home and still have a few bucks left over. And if there's no equity left in the home, so what? You've spent all the cash you saved for your old age, and that's a smart way to go.

For more information about reverse mortgages, call Fannie Mae. Fannie Mae is the nation's largest secondary purchaser of reverse mortgages and is in tune with what's happening nationwide. Call 765-7600.

Carmel Hopkins, real estate product manager for the Las Vegas Review-Journal and Las Vegas Sun, can be reached at 380-4574. Her e-mail address is Carmel_Hopkins@ reviewjournal.com. Snail mail is P.O. Box 70, Las Vegas, NV 89125.

Real Estate home