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O’Connell & Aronowitz Attorneys at Law
Trusts, Estates, and Elder Law Update Fourth Quarter 2013
Pictured above are the attorneys of our Trusts, Estates, and Elder Law Department, left to right: Matthew J. Dorsey, Esq. William A. Favreau, Esq. Heidi Dennis, Esq. Fred B. Wander, Esq. Jami Durante Rogowski, Esq. Not pictured: Brittnay M. McMahon, Esq.
In This Issue: • Could A Reverse Mortgage Be Right For You? • How To Choose A Nursing Home For Your Loved One • Year End Tax Tips • Meet Pamela Nichols, Esq. • Ask the Lawyer: Q&A On Reverse Mortgages • O&A Events • General Information about O’Connell & Aronowitz
A Primer on the Use of Reverse Mortgages Could a Reverse Mortgage be Right for You?
If you own a home, are struggling to pay your debts, or need to make a home improvement, a reverse mortgage may assist you in achieving your financial goals. A reverse mortgage allows you to draw from the equity in your home to obtain either a lump sum of cash, a monthly income stream, or a line of credit. Reverse mortgages are available to individuals over the age of 62. In the event there is more than one homeowner, both individuals must be at least 62 years of age. Each borrower must participate in an educational seminar, which is required by the Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA), to ensure his or her complete understanding of the program. Further, each borrower must meet the necessary credit requirements and all outstanding debts liened against the home must be satisfied prior to the reverse mortgage closing. After the borrower’s home is inspected and deemed to satisfy FHA guidelines, the loan may be closed and the proceeds can be used in any way the borrower sees fit. Quite commonly, the borrower uses the proceeds for medical expenses, home improvements, or general debt payments. All proceeds from a reverse mortgage are non-taxable since they are not considered to be income. The borrower continues to be responsible for the real estate taxes Saratoga Office: 1 Court Street Saratoga Springs, NY 12866 518.584.5205 Fax: 518.584.5441
and homeowner’s insurance payments associated with ownership of the home. The borrower is not obligated to pay any part of the mortgage loan during his or her lifetime. Repayment is only required upon the borrower vacating the home, although the homeowner may repay any or all of the debt at any time without a pre-payment penalty. Essentially, the outstanding debt becomes payable upon the death of the borrower, the sale of the home, or in the event the borrower decides to move to another residence. Lastly, all reverse mortgages are “non-recourse,” which means the borrower does not have any personal liability in connection with the loan. Reverse mortgages are not the solution for every individual. It is critical to seek advice from legal counsel and an accountant so that an informed decision can be made. Thereafter, a call to a licensed loan originator will begin the process. If you are interested in learning more about whether a reverse mortgage is right for you, please contact the attorneys of O’Connell and Aronowitz at the office closest to you. Thank you to Richard Norelli of Homestead Funding for his contributions to this article. Mr. Norelli assists borrowers with reverse mortgages and may be contacted at (518) 292-1684. Follow us on:
Albany Office: 54 State Street Albany, NY 12207 518.462.5601 Fax: 518.462.2670
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Plattsburgh Office: 206 West Bay Plaza Plattsburgh, NY 12901 518.562.0600 Fax: 518.562.0657