Monday, August 20, 2012

Can I Get A Reverse Mortgage If My Home Is In a Trust?

Many forward thinking seniors have created an estate plan for legal and tax purposes.  While this can be a great thing, it can make it harder to get a reverse mortgage or other type of home loan.  One question I get often is can a person get a reverse mortgage on their home if that home in owned by a Trust?  The answer is simple; it depends.  First lets talk about the different kinds of Trusts.

Revocable vs. Irrevocable

When planning your estate, there are two different kinds of Trusts, revocable and irrevocable.  The revocable or "Living Trust" is simply a Trust that can be changed or modified at any time.  These are the most common types of Trusts because who wants to be locked into something permanent if they don't have to?

The Irrevocable Trust is the opposite, once the agreement has been signed, it cannot be changed in any way.  These types of Trusts are not too common while the Trustmaker is alive.  Most revocable Trusts will be changed to irrevocable once the Trustmaker dies.

There are many benefits for having a Trust such as estate tax reduction, asset protection, and charitable estate planning.  If you are looking for ways to protect your estate for your spouse or children, a Trust is a great way to go.

Reverse Mortgages and Trusts

So, can you get a reverse mortgage while your home is being protected in a Trust?  Like I said before, it depends on what type of Trust you have and also the wording of the Trust.  Most revocable Trusts are set up to allow different types of financing on your home, and if they are not, they can be changed to allow a reverse mortgage.  You can also quit claim out of a revocable Trust which is the easiest way to get a reverse mortgage if you have a Trust.

An irrevocable Trust on the other hand is not so easy.  Unless the Trust specifically provides an exception for refinancing the home, then you are out of luck.

Bottom line is having a Trust along with a reverse mortgage can be a great way to plan your estate.  If you have a Trust and are looking into a reverse mortgage; before you apply, check to see what type of Trust you have and how it is worded.  If you are thinking about having a Trust created, you may want to look into the reverse mortgage first and then the Trust because it will speed up the reverse mortgage process and paperwork.

If you have additional questions, visit our reverse mortgage website or call 800-431-9250.

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