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Helping Retirees and Seniors with a Critical Financial Planning Element

Helping Retirees and Seniors with a Critical Financial Planning Element

Monthly cash flow seems to be the order of the day.  As we age, many of us find ourselves in a constant battle trying to manage funds in from income and funds out for living expenses and care. Reverse Mortgages go a long way toward addressing this issue and helping to establish financial balance but you still need a comprehensive plan.  Many people are too quick to focus on money in and neglect to fine tune their focus on money out.  This is a critical area that needs focus especially in the current low interest rate environment where seniors make next to nothing on their savings.

A common area that lacks focus is real estate taxes.  Almost all of our Reverse Mortgage clients are paying full real estate taxes on their homes and have no idea that they may be exempt or partially exempt.  The county is not required to provide exemptions if you do not apply.  We have witnessed many of our clients seeking balance and sometimes refuge with the benefits of a HECM Reverse Mortgage, yet they are paying in excess of $5,000 annually in real estate taxes that they cannot afford.  This is a real problem and could cause people to lose their homes if they are ever in a position that they cannot pay the real estate taxes.  The solution is quite simple.

In order to address this issue and potentially reduce or eliminate the mandatory requirement of real estate taxes, seniors need to apply for an exemption.  The exemption process is quite simple but often seniors do not want to deal with the bureaucracy of local government.  It can be confusing and intimidating so it is best for family members and fiduciaries to get involved to help.

As an example, in the County of Fairfax in Virginia there are four trounces of exemptions based on your annual adjusted gross income.  In addition, there is a $340,000 net worth maximum that excludes your home value.  The vast majority of our clients and retirees and seniors seeking a Reverse Mortgage easily meet this requirement. The sticking point is usually that they are completely unaware of this option or that they are behind on their tax returns.  The exemption program requires the submission of current tax returns.

Expense management is an important component of monthly cash flow.  Financial balance and security for ourselves, our parents, and our elders is not a guarantee.  Again, a government insured HECM Reverse Mortgage is an excellent tool to help in this area when there is a good fit, but it is also important not to lose site of the basics and manage the expenses.  Other related categories may be personal property taxes on vehicles where exempt and making sure we are properly insured but not over insured on our home.  All of these factors affect money out requirements. 

George H. Omilan
President-CEO - NMLS# 873983
Jefferson Mortgage Group LLC
Helping seniors with Reverse Mortgages in Virginia, Maryland and Pennsylvania.

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