REVERSE HOME LOANS IN NEW YORK
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Revocable Trusts And Reverse Mortgages
A revocable trust, also known as a living trust, is a trust that the grantor (the person who creates the trust) can modify or revoke during their lifetime. With a revocable trust, the grantor retains control over the assets in the trust, including the home that is subject to the reverse mortgage.
When it comes to reverse mortgages in Queens & NYC, a revocable trust can be a good option. The borrower can obtain a reverse mortgage using the home held in the trust as collateral, and the trust can remain intact during the loan term. In the event that the borrower passes away or no longer occupies the home, the reverse mortgage must be repaid, but the trust can continue as before.
Irrevocable Trusts And Reverse Mortgages
An irrevocable trust is a trust that cannot be modified or revoked once it has been created. With an irrevocable trust, the grantor gives up control over the assets in the trust, including the home subject to the reverse mortgage.
Because the grantor of an irrevocable trust gives up control over the assets, obtaining a reverse mortgage can be more difficult. In general, reverse mortgages are not available for homes held in irrevocable trusts, as the lender wants to ensure that the borrower has the ability to repay the loan. However, there are some options available for irrevocable trusts, including:
Settling the Trust - The first option is to settle the trust and transfer the home out of the trust before obtaining the reverse mortgage. This may require the help of an attorney, as it can be a complicated process.
Obtaining a Line of Credit - Another option is to obtain a line of credit instead of a traditional reverse mortgage. With a line of credit, the lender does not require repayment until the home is sold or the borrower passes away. However, this option may come with higher interest rates and fees.
Using Other Assets - Finally, the borrower may be able to use other assets to obtain the reverse mortgage. This can include assets held outside of the trust, such as investments or bank accounts.
Reverse mortgages can be a useful financial tool for seniors who want to access the equity in their homes. When it comes to trusts, revocable trusts are generally the easiest option for obtaining a reverse mortgage, while irrevocable trusts can be more challenging. However, there are still options available for borrowers with irrevocable trusts, including settling the trust, obtaining a line of credit, or using other assets to obtain the loan. As always, it's important to speak with a local estate attorney in Queens, NY before making any decisions about reverse mortgages relating to trusts.