Written by Chris Boyle, firstname.lastname@example.org Friday, 20 December 2013 00:00
With the national economy still showing signs of stagnation, money issues remain paramount among people of all ages; however, the elderly tend to be hit the hardest, as what may have appeared to be an adequate nest egg many years before can suddenly become woefully inadequate once retirement age finally hits.
Irene Genovese of Copiague worked in the real estate market for more than 30 years; she is now retired, and, with former business associate Julian Giaquinto, holds a series of regular seminars on reverse mortgages as a community service; she recently held one at Massapequa’s Bar Harbour Library branch.
“We all worry about running out of money at some point in our lives,” she said. “We didn’t prepare for these types of problems 20 or 30 years ago...we were too busy working and having kids and putting them through school and getting them married.”
A Home Equity Conversion Mortgage (HECM), otherwise know as a reverse mortgage, is a way for older residents who are homeowners to generate additional money to assist them with maintaining their lifestyles during their hard-earned retirements, Genovese said.
“With a regular mortgage, the bank gives you money towards buying a home, and you pay them back over time, reducing your debt until you have nothing left,” she said. “However, a HECM is getting money from the equity in your home, so that you can live more comfortably while increasing your debt.”
“For example, if you’ve recently taken out a mortgage on a home and you’re struggling, we pay that off,” Genovese continued. “Also, you can get some cash from it, or you can leave it in an equity line if you have money that you don’t want to use right away,” she said. “For example, you never get 100 percent of what your house is worth, but let’s say you’re eligible for $300,000...you can use that to pay off your current mortgage, or to pay off some other debt, and the rest can be put in an equity line, which is like a giant credit card. And you don’t pay interest on the money in your equity line until you use it.”
A HECM can only be used for a person’s primary residence; 62 is the required age to qualify, in addition to keeping up with your insurance and tax payments. However, the older you are, the greater percentage of your home’s worth you can access with a reverse mortgage, Genovese said.
“You will never get 100 percent, but someone who is 82 will get more than someone who is 62,” she said.
The benefits of a HECM are the ability to pay off a mortgage, a second mortgage, or a line of credit, as well has having extra money available in case they need it. However, Genovese made a point of dispelling a popular belief — that people who do obtain a reverse mortgage on their home run a great risk of losing it.
“That’s not true...you retain the title to your house. It remains your home. You are only using the equity that you have gathered over the years,” she said. “It’s your money, it’s tax-free money...it doesn’t affect Medicare or Social Security benefits. You retain ownership of your home and can never, ever be thrown out of it, even if you exhaust your equity line. You can live for another 40 years and the house still belong to you until you, your spouse, or both of you die...depending on who’s name is on the mortgage.”
Genovese said that reverse mortgages are especially important on Long Island, due to the fact that the area possesses one of the highest cost of living standards in the entire U.S.
“Our taxes are unbelievable, and after Superstorm Sandy, our insurance plans have been re-evaluated, and many of us are playing high premiums,” she said. “That’s why a HECM is valuable, because you can reach into the equity if you come up short on your taxes.”
Anthony Di Marino of Massapequa Park attended the seminar to find out about raising some money to help with the care of his 107-year-old mother, who is beginning to show early signs of dementia.
“My mother is very elderly, and she’s still living at her home in Queens. I have help in the house — I have aides there 24 hours a day — and it’s very, very expensive. My money is running down, and I can’t afford to keep paying for it,” he said. “So, I’m interested in finding out more about getting a reverse mortgage on her house to help pay for the aides, because she doesn’t want to go to a nursing home. I want to keep her happy for whatever time she has left.”
Massapequa Park resident Herb Gerson also attended the seminar to find out what to do if he and his wife face dire financial circumstances in the future.
“We’re in good financial shape right now, but when the need arises, I’d like to know what it’s all about,” he said. “When our finances are completely exhausted I guess this would be the only thing to rely upon...I haven’t looked into this before, so I have a lot of questions.”