Public Television special Reverse Mortgages Explained

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How can a reverse mortgage lower estate taxes?

The full value of a home owned outright is subject to estate tax, but a reverse mortgage against the property reduces its value thus lowering any applicable estate tax.

A reverse mortgage is a lien against the property that must be repaid when the borrower permanently leaves the property. At death, the full value of the property would not be included in estate valuation for tax purposes.

The debt would effectively reduce the property value and lower estate taxation.

Eben

Reverse Mortgage Variations

Reverse mortgages come in three standard types. The most popular by annual origination volume is the Home equity conversion mortgage AKA HECM. This type gives the senior borrower the highest net principal limit (CASH) in most circumstances.

The Second type of reverse mortgage is the Fannie Mae Homekeeper. It has lower upfront costs than the HECM, but the net principal limit is significantly lower than the HECM.

The third is the Cash Account or what I call the reverse mortgage jumbo loan . If the home is valued at a significantly higher value than your local FHA lending limit, the Cash Account may give the highest net principal limit available at closing. The Cash account is known for its low to no closing costs. :) !

Eben
www.mireverse.com

HECM Benefits: Inflation Hedge

A reverse mortgage credit line growth can be used as a hedge against inflation. The credit line grows at a rate .5% higher than the current interest charged on the line.

Since the interest on the credit line is a function of T-bill rates which have an implied inflation premium, When the rate of inflation incrses the credit line should grow at an even faster rate.

Simply put when inflation is corroding your spending power the credit line will give you more available cash to supplement your income.

That's all for now.
Eben http://www.mireverse.com/