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Show THE HERALD, Provo, Utah, Sunday, September Page E4 pmojvam CATHERINE WILSON ' By Associated Press Writer Margaret Gregory was dipping blto 'her savings so deeply she was afraid she'd be forced to sell her condominium and move into airi' apartment. "I'm years old ... come August and I was using up my savings because I didn't think I wsf joing to live so long, and v - didn't realize what I was i jg to live on," said Mrs. reurea social woncer. SSTft was a reverse ft. solution Hgage on her San Diego the opposite of a mortgage. Instead of Jog equity as she pays the each month, the company Cher each month as her Jjtdrops. financial tool is available hree companies, a handful rtates have offered publicly vd or backed programs, and 84 stan-jhho- gffederal Housing Administra-ihi- s month is launching a jhprogram with 2,500 insured me' mortgages available na-e way to think about this is e are nearly 19 million elder- households in the country. e percent of them own own home and 73 percent of the owners own their homes free Ighty-thre- their and clear." said Judith May, the chief architect of the FHA program. "Yet at the same time, 1.7 million elderly owners have houses worth more than $50,000 and annual income below $10,000. "In other wrds, they could be described as house rich and cash poor, and they could be candidates jf or reverse mortgages." .To encourage a test of the offerings, the FHA program, which" began July 24, allows selected lenders almost every option ever thought up. Borrowers 62 and older can choose from a lifetime reverse mortgage, one that lasts a specific number of years, one that offers a line of credit or a combination; Interest can be either fixed or adjustable. Homeowners Reverse ortgages By The Associated Press iere are some things to know abput reverse mortgages and some sources of further information: TYPES OF MORTGAGES: "Tenure" or lifetime mortgages guarantee homeowners monthly chjecks for as long as they live or occupy the house as a principal residence. "Term" loans offer monthly checks for a specific number of years. loans let borrowers draw payments of any size or frequency up to some maximum amount. "Line-of-credi- retains Ito equity to 10, 1969 Mrs. Gregory, ar on-sharing. long divorced Florida is about to kick off a program, but outsiders are critical. It only offers term mortgages, people must be 70 or older to apply, payments go down if interest rates go up, and lenders will be allowed to claim contents from an estate other than the house if payments exceed equity. Lenders and experts familiar with the program have been critical, and administrator Rodney Roberts said the sponsor is reexamining the age limit. "There will be improvements to this program. There will be improvements to all of the others." Other state programs operate in Connecticut and Rhode Island. In Virginia, the program was so popular the fund was exhausted; Maryland is launching one, and Pennsylvania and North Carolina are developing programs. American Homestead Mortgage Corp. of Mount Laurel, N.J., the largest private lender, has written more than 2,500 reverse mortgages since 1983 and now operates in eight states and the District of Columbia. Capital Holding Corp., of Louisville, Ky., introduced its product in October, and Providential wrote its first loan in November. "Seniors are a little cautious about doing something this big, and it is a big deal," said Capital Holding spokeswoman Tricia Snoke. "We encourage them to talk to financial advisers, talk to their children, talk to their bank70-ye- "The typical borrower has years of age, about single women living alone, 25 percent elderly couples. Their average income has been below $10,000 for women and below $14,000 for couples," Ms. May said. She believes the FHA offers the best deal for those with homes worth $150,000 or less. Higher 75 s "Would you call it the wave of the future? No, maybe a ripple. The likelihood is it's going to remain fairly small," said Ken director. jfltf&s JJL JsL just those about treatment, and by all people, not ff KSfe hu kfh H J J? "Shared appreciation" mort- so. i i r m mm my bank understands my special needs. iV; mm m, m aw mm f . Fixed amount of cash each month 3. Future appreciation 1. Must be a repaid by specific date 2. May have to Disadvantages: move if unable to repay loan 3. Could lead to difficult financial situation and loss of home terms Central Bank Who Borrows B: Reluctant to leave home. each month ,.3 HI," A: Plans to sell home. Recently widowed. Lost modest pension. Plans to move In with relatives. Needs small monthly cash supplement. Ill ?fl St s I ! tit . Hi! MlWHtK and frail. Needs substantial cash u tit i C: Plans to remain in home for four to six years. On waiting list for a congregate housing facility. Needs modest monthly cash supplement. Wants to preserve equity in house. 1 Loan Term C B VISION CENTER State, OOI 1549 N. 1 1 AdneTnthly Total Interest tJtSn, $1,000 $300 $14'400 $48'000 $28'800 $38-40- $3.364 $11.212 $15,420 $20,560 4 Next OREM to Sounds Easy f A $300 . Orem Springville tour years lour years eight years eight years Monthly Advance roiC $400 Mapleton Riverside Plaza NORTH OREM D: Plans to remain in home for four to six years. On waiting list for congregate housing facility. Needs more monthly cash. Not worried about equity buildup in house. A secure I feel Don't be shy when it concerns your money. Everybody has different needs and we understand. When you bank with us, rest easy. We are doing what you need us to do. Provo Spanish Fork Payson ndtfrepou'ro- - 70EQ sjUO Ca " ltlM Witt V ). SBT "-76- Ramalnlng Equity at Term: 0 3 6 $62,236 $72,277 $83,234 Appreciation Appreciation Appreciation $20,788 $30,829 $41,876 $35,780 $57,122 $83,288 Source: Amencen Auocuton of Hatred Persons $21,040 $42,382 $68,548 APH. Yarrington 600BWIU. TO if Prompt Service Shop or Home Sat. House Calls by Appt. Discounts to Senior Citizens 225-755- Vol Brewtr 0 798 So. State, Orem 1 3 II Grady Brewer RS Retire In Style. H Durable powers of attorney can be used to request that treatment be continued or to request that such treatment, including food and water, be withheld or withdrawn. Most important, they allow you to say who should be responsible for making health-car- e decisions if you are not able to do icnowing An Example Based on an $80,000 Home at 10 Interest 2. Flexible loan cataract operation. Hi ass Advantages: be able to consent to or refuse the cal consent to the operation. Many states prohibit implementation of the declaration if the patient is pregnant. Others exclude certain types of care from those that the patient may request to be withheld or withdrawn. In the past, powers of attorney were used for financial matters. The person giving the power (the principal) designates someone else (the attorney in fact or agent) to make business and financial decisions for him or her sell real estate, invest money, sip a business contract. Traditionally, the principal had to be competent; the power of attorney terminated upon the principal's incapacity or death. However, under current law a power of attorney can be "durable" and endure or continue in effect even if the principal is incompetent. More important, states now recognize that the powers conferred by a durable power of attorney may include the authority to make health care decisions on behalf of the principal. A durable power of attorney for health-car- e decision-makin- g is a more versatile document than a living will declaration. It can be used for all medical decisions, not t" gages share property value increases with; the lender, and are offered in combination with term and lifetime mortgages, generally resulting in a lower interest rate. THINGS TO CONSIDER: Costs can include application fees, closing costs, interest, sales commissions and future appreciation. ; Eligibility generally begins at age 62,! and homeowners must be free from mortgage debt or have only a small balance. Interest generally ranging from 8 percent to 12.1 percent, and mortor adjustagages can be fixed-rat-e ble. SOURCES OF INFORMATION: The American Association of Retired Persons offers: Consumer's Guide to Home Equity Conversion Advising Older Homeowners on Home Equity Conversion: A Guide for Attorneys Home Equity Conversion for the Elderly: An Analysis for Lenders The Unique Asset: A Home Equity Conversion Guide for Financial Advisors Write) AARP Home Equity Information ; Center, Consumer Affairs Section American Association of Retired: Persons, 1909 K St. NW, Washington, D.C. 20049. A gives directions about the medicsl treatment you do or do not want In tho event you ere terminally ill and unable to make treatment decisions or give directions to doctors. REVERSE MORTGAGES 11; In A living wEI sslis war ill. the example given above, if the Alzheimer's patient, while competent, had executed a durable power of attorney authorizing someone to make health-car- e decisions, the person named in the document would needs some medical treatment, i U just those who are terminally such as a cataract operation, but is unable to give the necessary medi- - By VICKI GOTTLICH Most people, when planning for their future or for an unforeseen illness, think only of ensuring that their financial affairs are in order. It is equally important to protect decithe right to make health-car- e sions. Competent adults may consent to or refuse any medical treatment that is proposed. But suppose they lack the capacity or are no longer able to make a determination about the treatment. Who would make that decision? In some cases, doctors would turn to family members. Or they might go to court to ask that a guardian be appointed to make medical decisions. The simplest, most effective way is to give directions in advance about who has authority to decide, and about what treatment is wanted or not wanted. Living wills are the most common document used to plan for future medical care. Forty states have statutes recognizing living will declarations. A living will gives directions about the medical treatment you do or do not want in the event you are terminally ill and unable to make treatment decisions or give directions to doctors. It also names tije person you decide should carry out your wishes or should act on your behalf. There are limitations to the use of living wills. Because they can be used only when a person is terminally ill and death is imminent, they do not help incompetent patients who are not terminal. If the treatment in question is not "life-pr-o il s5- sis Center, which b faded by the Legal Services Cerpors-tio- n U give support to weal legal services programs. It does not represent individuals; if you have questions, er seek representation, contact your local bar association or legal services program. er." Scholen, longing," it also may not be covered. Thus, a living will is not effective for an Alzheimer's patient who Na- tional Senior Citiieas Law m savings. The reverse mortgage on her $135,000 condo is with the Providential Home Income Plan based in San Francisco. She pledged 60 percent of equity and gets about $500 a month as long as she lives to help meet a $1,300 monthly budget. Providential will be repaid the full 60 percent when she dies. "It's a lifetime program, so the longer you live the more benefit you get from it. If I should die in the next day or two, they would get the benefit of my estate, but if I can live six years or more I will get the benefit." Her sister in nearby Carlsbad now is getting one herself. "It's very good. It really solves my problems," Mrs. Gregory said. "In a year or two, I'd probably have to sell the house and find some other living arrangement that would be cheaper. I didn't want to move." The same thoughts were expressed by some of the 3,500 older Americans who have opted for reverse mortgages. two-third- is an attorney with the values wouu bring higher benefits from private plans. The maximum payout on FHA loans is tied to age, interest, and the form and amount of the loan. A widow with a $100,-00- 0 debt-fre- e house would qualify for $812 a month on a five-yefixed-terreverse mortgage at 10 percent interest with no appreciati- and with no children, had maintained a private practice in psychotherapy until last year. She had been living on her Social Security and was spending her been about Editor's Note; VicU GottUch CiORTiGOi-jneir-s can pledge 100 percent of their equity or any portion. Appreciation in home values can be factored in. No matter which options are selected, homeowners can stay at home until they move, sell or die. At that point the lender gets the full amount of equity that was pledged, even if it wasnt all used. tor unforeseeable Living wills plan AG. 377-967-0. retirement center with beautiful surroundings, home cooked meals, maintenance free living and so much more. The Senior Life Club is a free service of Utah Valley Regional Medical Center, American Fork Hospital and Orem Community Hospital. It offers special guidance, assistance, opportunities, discounts and education to persons 65 and older. Some benefits included are: Assistance with Medicare and Insurance Forms Access to Emergency Personal Response Systems Pharmacy Discounts Mall Walking Exercise Program Free Health Screenings Educational Classes Free Blood Pressure Checks Senior Telephone Hot Line Free Monthly Senior Health Report Newsletter To join and receive these benefits, simply call one of the facilities listed below. AMERICAN FORK HOSPITAL 763-35OREM COMMUNITY HOSPITAL 09 379-701- 0 UTAH VALLEY REGIONAL MEDICAL CENTER Inlermountain Health Cm Facilities 379-701- 0 |
