A General Presentation Of Estate Planning

Estate planning isn’t probably something you enjoy discussing, but you have to do it since it is essential for the welfare of your loved ones after you pass away.

Those terrible stories about family conflicts and all sorts of divergences that occur when a person dies without delegating his assets are very common. People consider that their affairs will be handled perfectly after their death by their surviving family members. History reveals us the opposite and that is why having a basic plan can be enough in order to avoid a lot of major problems. Some people consider an estate plan isn’t necessary and that’s wrong.

Reality shows us that each person who owns assets needs a plan in place. Assets include investments, insurance policies, business interests, retirement savings, real estate. The thing about estate planning is that it isn’t only about what will happen after you die; things are much more complex than that. Except from death, some other unpleasant things may happen to you, like accidents or injury and this can make you unable to deal with your affairs. When you plan your estate, you don’t have to spend numerous hours going through never-ending options. There are attorneys that can offer you good advice to help you decide what will happen with your assets after you pass away.

In case you opt for an estate planning lawyer, you should known that he or she will become aware of your concerns, purposes and assets and this way, he or she will be able to organize your final affairs properly so that you can meet your goals. An accurate planning ensures you that your assets will be divided exactly the way you wanted. An estate planning attorney has also the ability to aid you selecting beneficiaries and a plan for the care of your minor children. He or she will walk you through the entire process of setting up your affairs in order meet both yours and your loved ones best interests when you die.

If you want to make a living will, estate attorneys can help you out. Your wishes can be expressed through this document in case life-saving medical care is required for you because of a medical emergency. In this document you can express your opinion concerning extraordinary measures that can be used to save your life. In order for you not to put your family in a nasty situation and to make sure you have control of your death, make a living will. You can’t know what tomorrow brings and that is why it is better to be prepared for the unexpected. In order to take care of your entire family’s future, you should opt for estate planning.

Be careful when it comes to your estate planning in order to avoid leaving your surviving family members in a difficult and unpleasant situation. Your things should be put in order so that no one would have to suffer.

Estate Planning Tools for People With Disabilities

Everyone should consider how their finances will be taken care once they pass on from this planet. For people with disabilities, care should be taken as to how they will be attended to as well as maximizing government credits and minimizing taxation of their assets. Since they have disabilities, there are different financial planning tools that are available. For cases where an attendant, guardian or caregiver is required, assets should be managed for the present and future periods on behalf of someone with disabilities.

There are various tax credits and government programs which exist to supplement people with disabilities. The tax credits will be listed here, but will not be explored in depth as this article focuses more on the long term financial planning and estate aspects. The tax credits available for people in Ontario, Canada are the disability tax credit, children’s fitness amount and Working Income Tax Benefit (expanded for children with disabilities), medical expenses, attendant care, the caregiver amount, travel expenses and home renovation tax credits. For any tax situation, the relevant tax code and regulations for that jurisdiction should be consulted.

There are two main options to consider when considering financial and estate planning. Will someone be taking care of the person with disabilities? In this case, this person would be providing the financial assistance, and they may require a financial plan for their assets as well as those of the relative with disabilities. The second option is whether outside assistance is required. If yes, will the assistance come from government programs, a future sum of money such as a trust or both? If government programs are sought after, care should be taken that they do not interfere with money held in a trust to maximize the benefit of all of the available assets. There are three main tools that will be discussed: the Ontario Disability Support Program (ODSP), the Registered Disability Savings Program (RDSP) and the Henson Trust.

Ontario Disability Support Program (ODSP)

If the family is not able to provide assistance to someone with disabilities, the ODSP is an option for you. This is not the same as Ontario Works, which is geared towards people with low incomes who need assistance with basic needs and finding work. The ODSP does not require people to find work, and tends to pay out more benefits than Ontario Works.

In order to get ODSP benefits, the person who needs them must get approval to receive them. The definition of a disability is a physical or mental impairment that is continuous and recurrent, and is expected to last more than one year. This definition also takes into account restrictions to one or more aspects of daily living. The documents to be completed are the Health Status Report and the Activities of Daily Living Index by a licensed health professional in Ontario. The needs test is the next step. Needs refer to what is required to pay the bills each month. Combined with this calculation is whether the person’s monthly income is higher than their budgetary entitlement. If it is, the person would not qualify for ODSP. The ODSP may also be reduced if the person is working or receives money from other sources, like pension payments.

If a person with disabilities receives more than $6000 in one year, ODSP payments are reduced. If such an amount is provided, the amount over $6000 can be spent on disability related goods and services. Exemptions can also be made for running a business, earning income from employment or education expenses. Some of the exemptions are limited to a certain amount before the ODSP is scaled back. If they receive more than $6000 in one year, they would have to spend it immediately in order to continue receiving ODSP benefits.

Assets are also taken into account when approving ODSP benefits. A person with disabilities should not have assets, except for non-exempt items, such as a principle residence, a second property if approved for their health and well-being, a motor vehicle of any value and a second motor vehicle valued under $15,000 for work purposes. Other non-exempt items are the trusts described below, funds used for disability-related items, interest earned on cashable assets, a compensation award of up to $100,000 for pain and suffering, business assets of up to $20,000 if they are self-employed, a prepaid funeral and approved loans for business expenses and training.

Registered Disability Savings Program (RDSP)

The RDSP is a savings plan that was introduced by the Government of Canada in 2008. It is similar to the Registered Education Savings Plan (RESP) which means that the contribution of money into the RDSP does not create a tax deduction to the contributor. Earnings within the RDSP accumulate on a tax deferred basis so there are no taxes paid on the growth within the plan until funds are withdrawn. Payments coming from the plan can be used for any purpose and must begin no later than when the person with disabilities turns 60 years old. In order to qualify for the RDSP, the person with the disability must qualify continuously for the Disability Tax Credit.

An RDSP contains three components, which are the private contributions, Canadian Disability Savings Grants and Canadian Disability Savings Bonds.

Private Contributions

Once an RDSP has been established, anyone can contribute to the plan provided the plan holder has given written authorization. The beneficiary’s parents, family members, non-related people or the person with the disability themselves can make deposits into the plan. The contributions are limited to a lifetime maximum of $200,000 but any amount under this limit can be contributed annually. Spreading of large deposits over a number of years should be considered because of the rules regarding the Canadian Disability Savings Grants and Bonds.

Canadian Disability Savings Grants

This can be a significant component of the RDSP. The Government of Canada will make contributions to an existing RDSP as Canadian Disability Savings Grants when private contributions are made until a lifetime maximum of $70,000 is reached or until the end of the year in which the RDSP beneficiary turns 49 years old. The amount of the grant in a specific year is based on the net income of the parents if the RDSP beneficiary is under 18 years old or on the individual’s income if they are over age 18 years old.

Canadian Disability Savings Bonds

In addition to the Canadian Disability Savings Grants, there is also the Canadian Disability Savings Bond. The CDSB are available to lower income families up to a lifetime maximum of $20,000. These funds are available up to $1,000 per year until the $20,000 maximum is reached or until the year in which the RDSP beneficiary reaches age 49 years old.

RDSP Payments

There are two types of payments that can be taken from an RDSP. The first type of payment is called the Disability Assistance Payment. The DAP is a periodic withdrawal from the RDSP at different points of time throughout the life of the plan. These withdrawals can only be made if the private contributions made into the plan are greater than the government contributions to the plan. If you only make the minimum contribution to the plan to achieve the maximum government grants and bonds, this payment from the RDSP will not be available. If you do make this payment, the grant and bond contributions for the prior ten years must be repaid to the government. This is called the holdback amount and could be up to $45,000 in repayments at the most. There is also a limitation that the holdback amount must remain in the plan as a guarantee of payment.

The second type of payment from the plan is called the Lifetime Disability Assistance Payment. This payment must begin no later than when the beneficiary is 60 years old. Once these payments begin, they must be continued. The size of the payment is determined by a formula based on the life expectancy of the RDSP beneficiary. The standard life expectancy has been set at 80 years old plus 3 additional years. If a doctor verifies that a person’s life expectancy is less than 80 years old then the formula would be adjusted.

Taxation of RDSP Payments

Each payment that is made from an RDSP is considered to be made up of three components. The first component is private contributions which are not taxed. The second component is the Canadian Disability Savings Grants and Canadian Disability Savings Bonds. Both of these components are taxable in the hands of the beneficiary of the RDSP. The final component is the income that has been earned on the private contributions, CDSG and CDSB contributions, and these would be taxed as well.

Henson Trust

A Henson Trust is a pool of money set up apart from the person receiving it. The money is controlled exclusively by the trustee and not the beneficiary, so the beneficiary cannot use the assets of the trust without the trustee allowing it. It is for this reason that the trust is not considered assets of the beneficiary, and this allows money to flow to the beneficiary from other sources, like ODSP. The beneficiary can spend up to $6000 from the Henson Trust without affecting benefits. This trust can have assets of any amount. It can be set up in the settlor’s will, or while the settlor is still alive. The settlor is the person who sets up the trust. Henson Trusts can be used to pay proceeds to someone with disabilities as well as other beneficiaries as part of an estate.

When Should You Use a Trust?

The key questions to ask are: Can the support provided from a trust be better than that from ODSP? Do the relatives have enough assets to support the trust, and are they willing to provide them? Are other beneficiaries self-sufficient or will they have to share in the assets of the trust? If they do, to what extent and how would that impact the person with disabilities? Is it possible that the person with disabilities would not qualify for ODSP because they can find work, run a business or earn income in some other way? The key theme is what methods would offer the best quality of life for the person who needs it? If ODSP is the main income source, then a trust would not be necessary. If there are assets available that would conflict with ODSP benefits, a Henson Trust is a good way to compliment these benefits. If there is an RDSP, this can work together with the Henson Trust to provide income in later years – 60 years old or more.

The Trustee Is the Key

Since the Trustee has absolute say in what happens with the Trust, it is wise to choose a group of people to oversee the trust, with a possibility of checks and balances between them to ensure the trust is doing what it is intended to do. This group would bring different skills to the table to minimize bias and conflict of interest. The trustees should be trustworthy, have good business sense, be organized and must have the needs of the beneficiary in mind first and foremost. The trustees are in fact being trusted with the livelihood of another person who cannot do it themselves.

There are many tools available to plan for someone with disabilities. Each of these tools should be measured against the situation at hand to see which one will do the best job of providing benefits. The timing of the benefits should also be examined to see when each instrument would be most beneficial.

Do you want to:
Learn how the world of money really works without the need of a time consuming or expensive course of study
Discuss what you want to achieve according to your horizon
Restructuring your finances to achieve your goals
Advice that is not affiliated with any institution or any product – an independent opinion

What Is Estate Planning and Is It Useful?

Estate planning creates a plan for distribution of your assets after you die. Most of us are familiar with a common product of estate planning: the will. Featured in TV shows and in everyday conversations, sometimes, the discussion surrounding this popular topic is not favorable.

We’ve seen people contesting wills, challenging their family members, feeling cheated by the administrators of wills and by the law and we’ve seen them arguing through lawyers about what wills mean how they should be executed. Other forms of estate planning exist to reduce the amount of conflict surrounding decisions.

Health care decisions can be included in estate planning; a health care proxy exists so that a chosen person can act out the desires of an incapacitated person still under medical care.

When it comes to the distribution of their wealth and medical decisions, multiple measures exist to enable the dead and the severely injured a means of executing their own desires. However, even in the case where no formal plans are made, heirs do receive some forethought in terms of the law.

The law of intestacy communicates that even if no measures are taken to distribute assets by a deceased party, those assets will still go to the deceased person’s heirs. The law of intestacy has the most staying power in situations where it is least likely to be challenged by those wanting more. For insurance, according to Attorney Sean W. Scott of Virtual Law Office, this law works with a small number of assets and a with a small number of heirs.

In each of these cases, one can imagine there would be less conflict involved. With less to fight over, less fights can ensue. The same is likely true with less beneficiaries; as heirs likely know one another well when smaller in number, less family tension can arise. Less instances of certain heirs feeling more worthy than others to certain possessions may exist. The likelihood that an individual or set of siblings would usurp others’ belongings may be reduced. And general confusion arising from miscommunication and a lack of cemented durable relationships may possibly decrease with a smaller set of heirs. None of these suggestions are set in stone, yet corresponding data would be a more than interesting dinner topic.

Scott emphasizes the financial advantages of estate planning, sharing that taking certain precautions can save money for heirs receiving portions of estates. As lawyers stay on the job, working to settle issues between family members or between the state and family members, their tabs continue running. Evaluating the multiple options may familiarize you with the best decisions for your situation, reducing stress and increasing savings for your loved ones after you pass.

6 Myths About Estate Planning

There are many myths and misconceptions surrounding the issue of estate planning. Most of these myths are the product of sloppy communication between consumers and the media, others are from the misunderstanding of some of our most basic laws. Estate planning is a powerful tool that individuals with large and small estates must understand to ensure that their estate is awarded to their chosen recipients when they pass away. The following are six of the most common myths about estate planning.

Estate Planning is only for the Rich. This is often a costly assumption to the people who most need the protection the most. The misconception comes from the focus on estate taxes by lawyers and financial advisors, but most people will not have to worry about complicated estate tax issues as they affect million dollar estates. Planning itself matters to everyone because it involves designating your health care and your assets to individuals of your choice in case you become incapacitated or pass away.

I Don’t Have Enough Money to be Charged Estate Tax. While this may be true today, estates over $5. 4 million dollars are slated to be charged a 35 percent federal tax in 2015. While this seems like an outrageous number, consider the value of your home, retirement accounts, and life insurance. Now for a growing number Americans, estate tax is a real possibility.

I’m Too Young to Plan. If you are of legal age, you are not too young. We never can predict when we will pass away or become medically incapable of making our own decisions. If you have any possessions or assets at all, no matter your age, estate planning is still very important.

If I Don’t Have a Will the State Can Take My Assets. If a person passes away without a will, the state will defer to its “laws of intestacy. ” These are state laws that determine who gets what. The laws may differ from state to state, so learn what the laws are in your state of residency. Even if you are comfortable with the laws, you should still draft a will to ensure the correct people receive your assets.

Estate Planning Protects My Assets. A family trust won’t protect your assets from lawsuits or business risks. Most states classify family trusts or living trusts as “transparent,” therefore your assets are vulnerable to lawsuits and other losses as if you never did estate planning. Homeowner’s liability insurance, and auto insurance are a few simple examples of true asset protection. Hire a specialist to protect any specific assets.

Avoid Estate Tax with Trusts. Most trusts won’t help you avoid estate tax. However, attaining the help of qualified legal advice can help you create strategies that will reduce or eliminate your tax liability.

There are a lot of damaging myths about estate planning. If you want to make sure that your loved ones are taken care of once you are gone, or that you will be taken care of in the case of incapacitation, talk to a qualified lawyer.

Estate Planning: What It Is and Why You Need It

If you are interested in planning to accumulate and conserve wealth during the course of your life, and eventually want that wealth distributed to your family, friends, and favorite charities efficiently and in a way that accomplishes your tax and nontax related goals, then you are interested in estate planning. In a nutshell, estate planning is about managing your property both before and after your death. And, the reality of the matter is that if you do not actively plan for the distribution of your estate, the government has a plan set up for you – a plan that may result in your family spending a lot of time in court and seeing a substantive portion of your estate dwindled down by taxes.

But, if you take action now, you have the power to decide what happens to your wealth and when. Proper estate planning allows you a systematic method for uncovering potential problems and finding solutions in seven major areas of your life – before they can wreak havoc on your loved ones when you are gone. These seven areas are: (1) liquidity – make sure your estate has the liquid funds necessary to maintain property, pay taxes, and other expenses associated with settling your estate; (2) proper disposition of assets – make sure the right people get the right stuff at the right time; (3) diversifying investments; (4) ensure adequate income for retirement; (5) stabilize the value of your business; (6) avoid excessive transfer costs; and (7) address any special issues (a child who cannot care for him/herself, etc.).

Now, that we have established what estate planning can do, let’s discuss who needs it. Simply stated, most people would benefit from some level of estate planning. Admittedly, for some people – all they really need is a simple will. But if any of the following apply to you, a simple will is unlikely to suffice:

1) Your estate exceeds the unified credit exemption equivalent. Currently the federal estate, gift, and generation skipping exemptions are all $5,430,000 (2015, the amount is adjusted annually for inflation).

2) Your combined state and federal income tax bracket exceeds 15%.

3) You have:

– Children who are minors.
– Adult children or other dependents that you expect to have their own wealth.
– Children or other dependents that are handicapped in some way or cannot care for themselves.
– A spouse that cannot, or will not, handle money, securities, or a business.
– Closely held business interests.
– Charitable objectives.
– Property in more than one state.
– Concerns for your heirs’ asset protection

4) You are a nonresident alien, resident alien, alien about to relocate to the U.S., considering becoming an expatriate, or you have property interests in foreign countries.

Estate Planning: What to Think About Before Meeting Your Lawyer

In my estate planning practice, it is not uncommon to meet with a new client who wants an estate plan prepared, but is a bit vague as to what should be included in that plan. Quite frequently, the initial conversation begins with the client saying something like, “I would like a will… or should I have a trust? Do I need anything else?” Actually, those are good questions to begin a discussion.

Most folks recognize that their estate plan should provide for the distribution of their assets upon their death. That, of course, is an essential element of an estate plan, but there is more to consider in a well-designed plan. Prior to meeting with your attorney for the first time you should also be thinking about such things as who you want to handle your affairs should you become incapacitated; whether you would want your doctor to keep you alive should you be near the point of death with little chance of recovery; who you want to have the authority to sign important legal papers for you if you are unavailable; and, who you would want to raise your children if you suddenly die. There is a wide variety of personal circumstances which impact estate planning, but let me offer the following as items you should consider even before you meet with a lawyer to discuss your own estate plan.

Should I have a will or a trust?

This is typically among the first questions posed by clients during an initial meeting. Many are aware that a trust will avoid probate, but that is true only if the trust is properly funded, meaning that all of their assets are transferred into the trust. Not every estate plan needs a trust, however, and it may not be necessary for you to incur the additional cost of having your lawyer prepare a trust, when a will is suitable for your needs. And, contrary to what some folks think, having a trust does not avoid estate taxes.

A trust may be the right choice for you, if it is unlikely that you will acquire more assets in the years ahead. What can often happen, however, is that folks will have a trust established and thereafter acquire new assets that they neglect to place in the trust. Then when they die the assets outside of the trust have to go through probate which defeats the intent of establishing a trust in the first place. So, before deciding upon a trust as the main element of your own estate plan, take some time to consider your future investment plans and major acquisitions.

There are some other advantages to a trust, which might make it the right choice for you. For example, should you become incapacitated, your trustee will be able to step in and manage your assets without having to seek a court appointed conservator. In that sense, a trust document is more all-encompassing and flexible than an ordinary will.

What else should I consider in my estate plan?

Estate planning isn’t just about deciding who gets your wealth when you die. It is also about making decisions as to what you want to happen should you become seriously ill or incapacitated.

Every estate plan should include an advance directive, which used to be called a living will. This document allows you to appoint a health care representative to make health care decisions for you, including end of life decisions, when you are unable to do so.

Similarly, we recommend that you give a durable power of attorney to a family member or trusted friend in order to allow your appointed agent to manage your financial and business affairs when you are unavailable or otherwise incapacitated. A durable power of attorney remains in effect so long as you are alive and should provide that it will be effective even in the event of your incapacity.

What about my bank accounts, life insurance and investment accounts?

Careful estate planning should include a review of all of your assets, including checking the beneficiary designations you have listed in your retirement plan and in regard to your investment and bank accounts. With such beneficiary designations, these assets will be transferred outside of the probate process to those persons you have previously designated as beneficiaries on these accounts. It is important that you review your beneficiary designations to ensure that your choice of beneficiaries is in accordance with your current intentions as to disposition of your estate.

A thorough review of your portfolio and consideration of the issues described above before meeting with your estate planning attorney will allow you to realize the maximum benefit from your meeting. It will also help your attorney to focus his or her discussion with you on aspects of the process that are most relevant to your goals and needs.

Consider Refinancing Your Mortgage

If you have an adjustable rate mortgage or a high interest rate, you may want to consider refinancing. A bank or mortgage firm can talk with you about your current assets and how a new mortgage can benefit you by:

– Lowering your monthly payment: A lower interest rate usually means a lower payment, leaving you with more money each month for other things. You may want to consider an adjustable rate mortgage that has an even lower payment during the initial period rather than fixed-rate loans.

– Change your loan term: Instead of lower payments being your priority, you may just want to pay your loan off faster. With a reduced interest rate, you could possibly keep your payment around the same cost, but have a shorter repayment term. Most institutions offer 10, 15, 20, and 30-year terms.

– Use the cash-out option for other debt or home improvements: With a cash-out package, you borrow against the home equity in addition to the mortgage balance. You can use these funds to make home improvements, pay for college, or consolidate other debts into a lower payment.

How it works

When you talk with a company about refinancing, you will go through an application, approval, and closing process, much like you did with your original mortgage. You will need to gather your financial information, including:

– Mortgage information – statements showing balance and payment history; also include information on any second mortgage you may have.
– Other debt – information on car loans, credit cards, or any other regular monthly payments.
– Income details – your pay stubs for a period of time, as well as recent income tax returns.


While each financing company may have different packages available depending on your particular situation, most will have these basic options:


With traditional programs, you can generally get a lower interest rate, lower payment, shorter term, or another beneficial outcome based on your goals. Regardless of who holds your current mortgage, most financial institutions will offer various options and rates. They are usually backed by Fannie Mae and Freddie Mac, and these are generally the lowest cost options that you will find.


If your home has increased in market value since your last mortgage, you may be able to refinance for an amount greater than you currently owe. This means you will have that extra cash at closing to make home improvements, pay for college, or consolidate other debt. As with traditional loans, you have conventional options with specific income and credit score requirements, as well as government-backed FHA and VA programs.


This type of refinancing option is usually available if you have a current mortgage with the same lender. They can skip some of the traditional steps since they are likely familiar with your payment history. There is less paperwork to fill out, which means less hassle for you and the lender. This relationship may also mean you qualify for a better loan term or lower interest rate.

Talk with a financial professional today about your refinancing options. Whether it is a lower payment, better interest rate, or better loan terms, you can find the package that is right for your particular situation.

5 Ways to Increase Your Credit Score When Buying a House

Buying a home for the first time can be a daunting experience, especially after finding out how much paperwork and information is required to perform the actual transaction – your credit rating will be one of the most important points of consideration. Here are a few simple ways in which you can increase credit score so that your chances of being approved for a mortgage loan are improved.

1. Reduce Outstanding Debt

When applying for a mortgage, all of your existing debt will be taken into consideration, as this will determine whether you qualify and what interest rate will be offered to you. If you have credit card debt, it is essential to pay off as much of it as possible before applying for your mortgage. Other debts such as medical bills, car loans and even student loans will also affect the size of the loan you will be granted. Ensure that as much of your debt is repaid as quickly as possible, as this will help improve your score dramatically.

2. Pay Often

Many companies only require a single payment on outstanding bills each month; however, making payments on outstanding bills bi-weekly or even weekly wherever possible is one of the easiest ways to increase credit score ratings quickly. An added benefit is that by paying more often, you will in fact be decreasing the amount of interest that is being charged on any outstanding account balances as well.

3. Don’t Close Unused Store or Credit Cards

It may be tempting to go through your credit report and close all of the unused store cards and credit cards that are on it. However, closing a number of accounts right before applying for a mortgage will in fact have a negative effect on your credit score – the longer your credit history is, the more chance you will have of qualifying for a home loan. If you feel the need to close accounts that are paid up, rather wait until you have been approved for a mortgage.

4. Get a Secured Credit Card

If you have a low credit score – or worse still, no credit history at all – you can help build one quickly by means of a secured credit card. Unlike regular credit cards, a secured credit card requires you to place an upfront security deposit into it, which is held as collateral by the card company. In many cases, you will be granted credit on it after at least a few months’ of responsible use, which will provide your credit score with the boost it needs.

5. Pay All Bills on Time

Many people think that their credit rating is only affected by credit card, store card and car loan payments. However, utility bills and medical bills are also taken into account when determining a credit score. As a result, all bills that are in your name should be paid on time every month.

When implementing the above mentioned tips for a few months, they will go a long way in helping increase credit score dramatically. It is important to remember that the higher your credit score is, the higher your chances are of being approved for a mortgage and the lower your repayment interest rate will be.

Top Questions to Ask Your Reverse Mortgage Specialists

For many seniors, the recent economic downturn and the rising cost of living have made living on fixed retirement income or social security benefits particularly difficult. Many also encounter rising out-of-pocket health care costs and other unexpected expenses. If you or your parent are having difficulty making ends meet, or if you would simply like more money to enjoy life in your golden years, a reverse mortgage may be a helpful solution.

Any homeowner age 62 or older is eligible to take out a reverse mortgage, which allows you to take out a loan against the equity in your home. You do not have to sell your home, and you may keep your property title in your name. In contrast to a standard mortgage, you will not have to make monthly payments. Instead, your lender makes payments to you. You have a variety of payment options to choose from, such as monthly payments or a lump sum, and there are no income, credit, or employment prerequisites to be eligible. If you decide that this kind of loan is right for you, you will want to work with someone you can trust. Here are some important questions to ask when searching for reverse mortgage specialists to partner with.

Are They a Broker or a Lender?

A broker can help you do all of the legwork when searching for the best rates and terms, but they will most likely charge a broker fee. If you are looking to keep your costs at a minimum, working directly with a lender is a smart choice.

Do They Have Experience as Reverse Mortgage Specialists?

When the housing bubble burst and the market for standard mortgages dwindled, many traditional brokers jumped into the reverse mortgage market. Therefore, many have very little experience with these types of loans, and they may not be as knowledgeable about your options as a lender with many years of specialized experience would be. Look for a lender with a proven track record.

Are They a Member of NRMLA?

The National Reverse Mortgage Lenders Association requires its members to uphold high ethical standards and adhere to a code of conduct. Choosing a lender who is an active member in good standing of this organization will safeguard your interests and ensure you are working with an ethical company.

Are They Approved to Offer HECM Loans?

HECM loans, or Home Equity Conversion Mortgages, are loans that are insured by the Federal Housing Administration. This means that if your lender goes out of business for some reason, you will continue to receive payments as agreed upon. Reverse mortgage specialists must be approved by the FHA to offer this type of loan.

What Kind of Fees Are Involved?

A reputable lender is able to tell you upfront and in detail what kind of fees and costs are associated with whichever loan option you choose. Ask him or her to explain each cost, and be on alert for any hidden fees.

The proceeds from reverse mortgages can be spent any way you like, and for many seniors, they are a beneficial solution to meeting their financial goals.

Guide and Tips for Choosing Mortgages

When it’s time to buy a house, you will need to arrange affordable financing. When assessing mortgages, many factors are at play and can impact the terms, making them more or less advantageous for the creditor. Future homeowners need to be aware of common concepts that impact the process, such as interest rate, closing costs, and points.

Overview of Loans

There are several residential and commercial loan options for buyers. A fixed mortgage involves payments and interest that will remain the same for a specific number of years, often 15 or 30. At the end of the term, you will have paid back the entire amount borrowed. Adjustable-rate mortgages have interest rates that change at specified times throughout the duration of the loan. This financing option often involves a lower initial rate, but it could go up or down depending on market trends. Another type of financing involves a short-term balloon loan for a fixed period of time. At the end of the term, the balance will be due, or the borrower will need to refinance.

Know Your Credit Score

Before you approach a bank, it’s advantageous to know your credit score. The type of financing you will get partially depends on your credit score. People with better credit usually receive better offers from lenders. The best time to check your own credit score is several months before you plan to approach lenders. This time frame allows you to make adjustments and potentially improve your score before you contact lenders.

If you have a score of at least 720, you should be able to qualify for lower rates. A score of between 780 and 850 is very high, so you should anticipate the best terms available from lenders. Scores between 620 and 720 are not as good, but you should still qualify for a loan. Numbers between 580 and 620 are considered low. A score in this range will probably result in higher interest.

Contact Lenders

Once you have a firm idea of the types of mortgages available and you know where you stand with your credit, you will be ready to contact lenders to find out what type of financing is available. Different types of lenders exist, including commercial banks, mortgage companies, brokers, credit unions, and thrift institutions. Rates will vary depending the type of lender, so it’s important to shop around. Questions to ask include:

– What are all current interest rates available? Are these the lowest at this time?

– Is the rate fixed or adjustable?

– If adjustable, how will the terms vary?

– What points are you currently offering?

– What fees are associated with the loans?

– What down payment is required?

– Is insurance required? If so, what would be the total cost?

After gathering information from various lenders, you will be ready to compare various options to find the most advantageous terms. Don’t forget the possibility of negotiation to get the best deal.