AmacAdvantage - Association of Mature American Citizens

[Pages:28]AmacAdvantageVol.2 Issue 2 ? $2.95

The magazine of the Association of Mature American Citizens

John McCain

War Hero

The Birth of Labor Unions

Understanding Reverse Mortgages Cooking for 2 ? Visiting St. Augustine

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To learn more, call: Robert DeAngelis CLU, ChFC 631 589.0100 Hometown Agency 5 Orville Drive Bohemia, N.Y. 11716

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Publisher's Letter

Dear Reader, In this issue, in the feature "John McCain, War Hero," we look into the story of what happened to John McCain when he was taken prisoner after his aircraft was shot down over Vietnam. What we found out was shocking.

We also look back in time to see the working conditions that brought about the birth of the labor union movement in America. My Dad was a union electrician and I remember his stories about how they had to fight to keep the communists from taking over the union in the 1930s. Today, the tradeunion members are some of the most patriotic Americans; perhaps because of their struggles, they appreciate the freedom we so often take for granted.

AMAC is growing! As the conservative alternative for Americans 50 and older, we are finding that there is a desire for articles and features that are presented in a fair and honest manner. Thanks for encouraging your friends and neighbors to join.

Our benefits keep expanding. In Florida, for example, Bealls Outlets will now accept your AMAC membership card for a 15% discount on Mondays. Check out our Website, amac.us, for the latest in local and national discounts.

AMAC members have asked us when we are coming out with sound proposals to help the needs of people 50 and up. Here we go. First, we'll be advocating tax reductions, particularly on property taxes. Unlike income taxes, which only increase when your income goes up, property taxes are constantly increasing. This especially hurts older people who may be retired and living on a fixed income.

Second, we'll address the underlying cause for taxes being increased each year. Put simply, taxes keep increasing because government keeps growing. When have you ever heard of government being reduced, at any level?

A number of years ago I was asked to submit a proposal to a large city government for a supplemental retirement plan for their employees. I contacted the administrator and told her my firm could provide the same program they self administered at a slightly lower cost than what they were paying. Not only that, I said we could eliminate the workload of five to seven people in the department, as my firm would handle that work as part of our contract. I was surprised when she told me, "Why would I want to shrink my department? Don't you understand? The more people I have, the more influence I have?"

With that kind of thinking, is it any wonder we can't shrink the cost of government? AMAC will endeavor to be your advocate to promote commonsense government and to let you keep your hard-earned money in your pocket--not the government's.

2 amac.us

With best regards, Dan Weber

Contents

AmacAdvantage

The magazine of the Association of Mature American Citizens

Vol.2 Issue 2

Daniel C. Weber Publisher

Rebecca Weber Keiffert Associate Publisher

Gary J. Christiansen Production Director Membership

Bill Terpenny Advertising (contact)

David G. Weber Account Executive

David G. Weber Gary J Christiansen Web Developers

James Smith Florida Director

Rebecca Weber Keiffert Editorial Inquiries

Association of Mature American Citizens 5 Orville Drive Bohemia, New York 11716 631-589-6675

Produced for AMAC by Footprint Media Custom Publishing

F o otp r i nt

Media inc

51 Gibson Avenue Huntington, N.Y. 11743

2 Publisher's Letter

4 Money

Is a reverse mortgage right for you?

7 Health

Learn the lifesaving skill of CPR

Page 22

9 Home

Save energy with a tankless water heater

10 Food

Cooking for two from Kathie's Kitchen

12 John McCain: War Hero

How McCain survived his years as a POW

15 The Birth of Labor Unions

How labor unions got started in the United States

Page19

19 Travel

America's Historic Cities: St. Augustine, Florida

22 Did You Know?

Tidbits to think about

23 Essay

Thoughts from Brother Juniper

24 Parting Thought

Page 10

RFK remembered

amac.us 3

Money

Reverse Mortgages

The basics you need to know about Home Equity Conversion Mortgages

By Dennis Haber

Areverse mortgage is a very special and different kind of loan. More than 90 percent of all reverse mortgage loans obtained are the government-insured FHA/HECM (Home Equity Conversion Mortgage). There are other reverse mortgage loans, called proprietary loans, but for the purposes of this article we will focus on FHA/HECM, as these are the most popular types. No matter which type you choose, it is recommended you talk with a financial planner or an elder law or estate attorney for expert advice before proceeding with a reverse mortgage loan.

In order to be eligible, the senior homeowner must be at least 62 years of age and use the property they are mortgaging as their primary residence. If two or more people own the home, then each

must have attained the stated age and each must use the property as their primary residence.

This loan is special and different because it requires no monthly mortgage payments to the lender, and because there are no income, asset, or credit requirements. This means exactly what it suggests: Unless you are in default on some prior federal debt, an individual with challenged credit will not be precluded from getting a reverse mortgage. Furthermore, what also makes it special and different is that neither the senior borrower nor the heirs have personal liability when the loan is ultimately due. The loan becomes due upon the death of the surviving owner, when the home is no longer the primary residence of any owner, or when the home is sold.

4 amac.us

It is called a "reverse mortgage" because the borrower receives funds instead of making payments. The flow of the money is reversed. In fact, the money can be received in a variety of ways. The borrower can receive all of it in one lump sum, in monthly amounts, or as a line of credit. As circumstances change, you can change the way the funds are accessed as well.

More and more of our seniors are exploring whether this loan is right for them. Seniors today are facing a plethora of challenges: Many have lost their pension or seen their pension reduced; Medicare Part B premiums have doubled since 2000. The increase in the price of crude oil is having a ubiquitous affect on all consumer products. Budgets that were in the black are now in the red. It is estimated that a dollar in 2000 will be worth just 67 cents in 2010. Many of our elders need help.

The biggest growth in the senior marketplace today is those 85 and over. It is estimated that in 2050 there will be 20 million seniors who have reached this age. This is astounding considering that in 1900 there were only 100 thousand individuals who had reached this plateau. In 1900, one in 25 people reached the age of 65. By 2000, one in eight people reached 65. This is a major shift in demographics.

In the good old days one got old, became sick, and then died. Today, the paradigm is very different. Today, one becomes old, gets sick, lives, needs care, and needs money to pay for it. At the same time, many of our elders bought their home 20, 30, 40, and even 50 years ago. They have seen their home value grow by a factor of 10, 20, or even 30 times the original value. So the main questions become 1) what options besides a reverse mortgage does a senior have? And 2) is a reverse mortgage an appropriate choice?

Study after study suggests that an overwhelming majority of seniors want to stay in their home. However, those who choose to sell face a more daunting task, as many housing markets are facing declining values. Because of the mortgage debacle, it is generally harder to obtain mortgage financing today. Selling and buying another home could be a challenge unless the proceeds from the current home cover the cost of purchasing a new one. Don't forget that it is also important to have additional funds to cover those financial storms of life. Some other options: You can sell and move in with family; sell and move into an assisted-living facility; sell and rent an apartment; etc. It is always a good idea to seek out professional advice.

Before you can determine whether a reverse mortgage is appropriate, you must look at the positive and negatives, the pluses and minuses, the advantages and disadvantages. For didactic purposes, I will highlight a few of the advantages and disadvantages of a reverse mortgage:

THE ADVANTAGES ? Never make a monthly mortgage payment ? Never a prepayment penalty ? No income, asset, or credit requirements ? The interest accrues only on the money you take

THE DISADVANTAGES ? Closing costs are higher than with a conventional mortgage ? Interest is compounded over time ? Monthly payment is not indexed to inflation ? Debt rises while equity decreases H

Dennis Haber is an elder law attorney and author of Piggy Bank Your Home; read his blog on reverse mortgages at dennishaber. com, and learn about his book at .

SUGGESTED RULES

Rule #1 Anyone can tell you what the closing costs are, but only you can determine what the reverse mortgage is worth to you. Some people believe it is too expensive. Other people think it is the greatest deal. Only you can decide. You must compare all your options.

Rule #2 Make sure that you hire a competent loan officer. All reverse mortgage loan officers are not the same. Suggestion: Get professional advice or have family and friends who know what they are talking about assist you.

Rule #3 At a minimum, make certain that the company you hire is a member of the National Reverse Mortgage Lenders Association. Keep in mind that this is not a guarantee that the company is good. However, NRMLA has a code of ethics that all members are supposed to follow.

Rule #4 Ask lots of questions. If you need help with the questions my book, Piggy Bank Your Loan, has 52 of them along with answers. Even without the book it is important to bring your 6 friends--WHO, WHAT, WHEN, WHERE, WHY, and HOW--with you.

Rule #5 This article does not make you an expert. It hardly scratches the surface. Consider this your beginning point. Then read the 4 rules above over again before getting all the facts and seeking professional advice.

RESOURCES

Piggy Bank Your Home: Tap Into The Power Of A Reverse Mortgage (DH Media, 2008), by Dennis Haber

Reverse Mortgages For Dummies, by Sarah Glendon Lyons & John E. Lucas (Wiley, 2005)

The New Reverse Mortgage Formula: How To Convert Home Equity Into Tax Free Income, by Tom Kelly (John Wiley & Sons, 2005)

ArcLoan,

National Center For Home Equity Conversion,

NRMLA,

National Academy of Elder Law Attorneys (NAELA),

amac.us 5

Honesty and Integrity - Two words rarely associated with today's

mortgage industry. Yet as you, and those you know, head towards the "Golden Years" it is critical that you find experienced, trustworthy professionals to educate you on your options. For over a decade ArcLoan? and ArcReverse have specialized in Mortgage Management.

Our focus is building an ongoing relationship and education, not on `selling' you a mortgage.

Over 62 ?

Consider a Reverse Mortgage

x You Never Have to Leave Your Home! x No Credit or income Qualifications ! x No Monthly Payments Are Made !

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Under 62 ? Consider Options Now To Access Equity Unique Programs for Asset and Equity Management

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1. Consult a tax advisor. 2. Reverse Mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. Family members are also strongly encouraged to participate in these informative sessions. Must be at least 62 years old. Call for more detailed program information. 3. Loan proceeds are not considered income and will not affect Social Security or Medicare benefits. Your monthly reverse mortgage advances may affect your eligibility for some other programs. You should consult either a local program office or your attorney to determine how, or if, monthly reverse mortgage payments might affect your specific situation. This information is accurate as of date of printing and is subject to change without notice. Mortgages provided by Access National Mortgage. Some programs not available in all states.

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