Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, June 12, 1995 TAG: 9506130008
SECTION: BUSINESS PAGE: 6 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Long
My sister told me there is some way that I can receive a monthly check from the state by leaving my house to the state when I die. Can you tell me how this works and how I can go about doing it?
A: Corinne Gott, director of social services for the city of Roanoke, said she knows of no state or federal public assistance program that would help you if you are receiving income. If your income falls within certain limits, however, you might qualify for medical assistance through Medicaid. Contact the department in the community where you live if you think that medical assistance would be helpful to you.
There is a federally insured home equity reverse mortgage available in Western Virginia. It is administered by Tidewater First Financial Group Inc. of Virginia Beach.
You can request a brochure by calling toll-free 1-800-282-4326. You will receive counseling before joining the program. The American Association of Retired Persons also offers a brochure on reverse mortgages. Send a postcard to the AARP Home Equity Information Center, 1909 K St. N.W., Washington, D.C. 20049.
Reverse mortgages, which are called Home Equity Conversion Mortgages, are designed to help people whose main asset is their home and who need extra cash to meet their expenses. For some people, the extra income from a reverse mortgage offers the only opportunity they have to continue living in the home.
To qualify for the program, owners must be age 62 or older, and their houses must be paid for, or mortgages nearly paid off.
The reverse mortgage can be a lump-sum payment or, more usually, a stream of steady monthly income. Or it can be a combination of both.
The size of the monthly payment depends on the age at which you begin taking the equity, the interest rate on the loan and the appraised value of the house. The higher the age and home value, and the lower the interest, the more money is available to you in the monthly payments.
If you take the stream of income, you will receive it for as long as you live in the home.
You pay interest from your monthly payments, just as you did when you bought the house. This is because you are once again borrowing money.
You must also pay an origination fee, closing costs and a mortgage insurance premium, but this can come out of the equity rather than directly from your pocket.
You can live in the home as long as you are able. When you vacate the house, it must be sold to satisfy the obligation. You or your estate will get to keep any excess equity in the home that you did not receive through the reverse mortgage.
Liens on real estate
Q: My husband and I own our home. If one of us had to go to a nursing home, could they take our home for the expenses?
A: The Roanoke City Department of Social Services said liens may be placed on the real estate of Medicaid recipients who are patients in nursing facilities. But there are several exceptions to this rule under the Omnibus Budget Reconciliation Act of 1993 and legislation passed by the Virginia General Assembly.
The Virginia Department of Social Services said a lien will not be placed on the home if it is occupied by a spouse or a dependent child under the age of 21 or a blind or disabled child of any age, or a sibling who has an equity interest in the house and has lived there for at least one year.
A lien is taken after six months if the Medicaid recipient owns the home outright. It is also taken on the patient's share of an interest in the home if the above conditions are met.
In the situation you asked about, no lien would be taken as long as the spouse continued to live in the house.
Finding fee-only financial planners
Q: The prospect of earning commissions or other incentives paid by third parties can influence the advice provided by a financial planner. How does one find a financial planner whose income is derived solely from consultation fees charged clients?
A: You can call the National Association of Personal Financial Advisors, whose members are all fee-only financial planners who have also met stringent training requirements for registration. The toll-free number is 1-800-366-2732.
If you call from Western Virginia, you will receive the names of two people who are fully registered. They are Andrew M. Hudick of Fee-Only Financial Planning in Roanoke (the president of the national association) and Rick A. Huff of Barringer, Huff & Stuart in Lynchburg. All other members in the state work in Charlottesville or Northern Virginia.
There are also several associate members in Western Virginia. A spokeswoman for the association said these people have not yet met (or have chosen not to meet) the requirements for full membership.
The associates are Paul G. Barringer of Barringer, Huff & Stuart in Lynchburg; David Cissel of Financial Solutions in Roanoke; P. Wesley Hambrick Jr. of Hambrick Investment Advisors in Roanoke; and James E. Pearman of Fee-Only Financial Planning in Roanoke.
by CNB