A reverse mortgage allows home owners who are at least 62 years old to take the equity out of their homes without having to sell. The loans are repaid in full when the home owner leaves their home, which can be because of a move to a different home, a move to an assisted-living facility, or death of the home owner. There are protections for the surviving spouse that ensure the survivor can remain in the home, assuming the reverse mortgage is properly completed. Another protection built into reverse mortgages for home owners is that these loans are government-guaranteed and the home owner will never owe more than the amount they borrowed along with the interest and fees on that amount. Even if the property value crashes and must eventually be sold for less than the loan amount, the home own...

Retirement income and expenses are surprisingly dependent upon the global economy. Interest rates affect the amount of income received in some cases and they can affect the cost of borrowing as well. Low interest rates reduce income while making other income options, like a reverse mortgage, more affordable. For several years, the Federal Reserve has been cutting interest rates in the U.S. Central banks around the world have been doing the same and in early July, three of the largest central banks in the world took actions to keep rates low and boost economic growth. Why cutting interest rates is important for the global economy The European Central Bank cut its key interest rate by a quarter percentage point and short-term rates in the Eurozone are now at a record low of 0.75 percent. The...

LIBOR, or the London Interbank Offered Rate, is a widely used number in the finance world. It is commonly used to set the interest rates on loans, including many reverse mortgages. For a reverse mortgages and other common types of financial products offered around the world, it’s typical for a lender or originator to carry an  interest rate that is stated as equal to LIBOR plus 3 percent, or some other number that’s added to the LIBOR base. The fact that it’s used around the world as a benchmark for charging interest makes LIBOR a very important interest rate. It is also a value that can be traded in the derivatives market where billions of dollars are bet on any given day and small moves can have a big impact on profits or losses. The interest rate is determined by a s...

Reverse mortgages are popular not just in the United States, but also in Great Britain, Canada, Australia and a number of other countries. According to a recent article in The Telegraph, a newspaper that is popular in London: “Pensioners are being left with little choice than to take out equity release mortgages to top up their insufficient pensions. Figures from Just Retirement, which has about a third of the equity release mortgage market, show that its customers now represent a broad swathe of Britain, rather than equity release being a perk for the rich. “Where we previously saw a focus on the most affluent social group, this has now been replaced by a profile that is far more in line with UK norms,” said Stephen Lowe, a Just Retirement director. “Equity release is ...

BMO Financial Group recently completed a study that shows many Canadian home owners are having difficulty balancing monthly mortgage payments with the need to save for retirement. The survey found that more than half (51 percent) of Canadians expect to carry a mortgage into their retirement years and more than half (52 percent) believe that their current debt payments including a mortgage is hurting their ability to plan or save for retirement. BMO Financial Group was formerly known as the Bank of Montreal and is one of the world’s largest banks with more than $538 billion in assets. The findings of the report: mortgages weigh down retirees Tina Di Vito, a researcher who leads the BMO Retirement Institute, commented in the release of the survey that, “Paying off your mortgage prior...

European governments face debt problems that seem to threaten the survival of the euro. The future is uncertain, as it always is when major economic events are concerned. On this side of the lake, however, our main concern with this debt crisis is what the potential impacts could be on our own retirements and on the retirement income of those who have already retired. Some tactics in the fight again a collapse in the Euro One of the government responses to the crisis has been a series of austerity budgets. Government spending is being cut back so that deficits can be reduced and even balanced at some time in the future. The impact of these budget cuts will have serious impacts on the citizens of the countries involved. Some countries are even considering cutting back on retirement benefits...

The Reverse Mortgage for Home Purchase on-line calculator is now available on the Legacy Reverse Mortgage web-site (http://www.legacyreversemortgage.com/reverse-mortgage-for-purchase).   One simply puts in the State and city where the home is going to be purchased, age of the potential borrower and amount available as a down payment.   By hitting the “Calculate your Estimate” button, the approximate maximum value of the home one wishes to buy is shown.  For instance, if a 74 year old senior is looking to purchase a home in CA and has $125,000 available for a down payment, the senior could be looking for a home valued up to $368,800. The other choice is where the senior has found a home or range of home values that she or he would like to purchase.  In that case, one would put in ...

Social Security is a means-tested program in Taiwan, so senior citizens with significant financial assistance don’t qualify for the program. Means-testing involves looking at your assets and excluding you from a program if your assets exceed a preset level. Just as in the U.S., some seniors can have assets but still not have enough money to live on. Their home could be their biggest asset but doesn’t usually offer a source of income. This is sometimes called “being house-rich and cash-poor.” In Taiwan, seniors with a house worth as little at $183,000 could be ineligible for a pension, but they certainly aren’t rich. Maybe we could call their situation “middle class and without an income.” To address this problem, the government has decided to test reverse mortgages. This tria...

Unemployment in Greece is officially 20.9 percent, and that is low by the standards of Spain where unemployment is nearly 25 percent…but that’s another story. With unemployment so high, it is obvious that many depend on the government for survival. In addition to those needing help because there are no jobs, there are a number of senior citizens who live on pensions. In Greece, all pensions are backed by the government. These payments – benefits under the social safety net and pensions – are now being looked at for cuts so the government can continue getting funds from the international community. As a nation, we can learn that excessive levels of debt eventually lead to dependency in some ways. Greece is a sovereign nation but in order to access the money it needs to conti...

Long-term care can become a sudden problem. While many senior citizens will require long-term care, it is impossible to predict when the need will occur. You could fall and suffer an injury or you could unexpectedly face another health crisis. The need could also come suddenly if you lost a caregiver who had been helping you avoid long-term care. Often, the long-term care decision comes down to a crisis and must be made at the worst possible time. In addition to personal and emotional factors that drive the decision, there are very real financial concerns to address. Long-term care is expensive and few will have the resources ready to pay for extended care. For many seniors, their home will be their most valuable asset. However it is an illiquid asset and to get the cash they need, some wi...