Insurance

What happens to my SBA loan when my business fails?

So your business is struggling, and you are wondering, what happens to my SBA guaranteed business loan?

What indeed...

Let's answer that question by first understanding what the SBA guarantee actually means. The guarantee is actually for the BANK, not the borrower. Which means that if your business fails, the SBA will pay back a portion of the loan to the bank, assuming the bank has followed the necessary steps in servicing the loan (more on that in another post).

Many business owners falsely assume that the guarantee means that they are "off the hook", and that the loan is satisfied by the guarantee. After all, the borrower paid 3% for this guarantee...it was insurance in case things didn't work, right?

Unfortunately, this is not the case.

The SBA guarantee only protects the bank's interest, and provides nothing but trouble for a borrower in default. This is because a bank that has this "insurance" policy acts very differently than one that may be exposed to a large loss from a defaulting commercial loan. The bank will do EVERYTHING in its power to protect that insurance policy, including shutting down a healthy, but struggling, company.

Moreover, the bank's ability to work or be flexible with a company that is faced with defaulting on their SBA loan is severely limited by SBA regulations.

In short, the SBA is acting as an insurance company, and the bank is the client. The SBA doesn't want to pay out unless they absolutely must, and so they limit the bank's ability to be flexible with the borrower. I know, this sounds crazy, but it's how the system is put together.

So, understanding that the guarantee is just for the bank, what happens next?

Well, after the SBA pays the bank, the SBA comes after you, the borrower, for the deficiency. The full deficiency. For example: if you borrowed $500,000, your company failed, and the bank got 80% repaid from the SBA ($400,000), you figure that your personal guarantee would be limited to owing the SBA $100,000, right? Wrong. The SBA will look to you for the full $500,000.

In any case, if you are faced with a default, you need help. Even though the bank has limited ability to be flexible, there are ways to settle the debt with the bank AND the SBA. Find yourself a knowledgeable, ethical, professional who can help you through this process and you can actually save your company, save your house, and settle the personal guarantees for pennies on the dollar.

Companies that rely on vehicle fleets have unique costs associated with doing business. Mobile assets require significant capital investment. In addition, fuel and maintenance costs can take up a significant portion of a business's profit margin.

However, there are additional hidden costs that many fleet managers overlook in the course of doing business. Lack of proper safety measures for vehicle fleets can incur significant out-of-pocket expenses, increase liability and put lives in jeopardy.

Many companies find that installing GPS vehicle tracking on their fleet vehicles provides one sure way to improve safety. GPS tracking offers a wide variety of features and benefits that businesses with vehicle fleets can utilise to significantly improve their safety records and protect their business from undue costs.

The Focus on Safety

By improving the safety of drivers and vehicles, businesses can significantly reduce payouts for accidents and violations. Many business owners do not realise that the true cost of an accident is 2 to 10 times more than the direct cost of the accident.

• The total cost of vehicle accidents include a variety of factors including:
• Lost time by employees at the scene of the accident
• Lost revenue because equipment is not producing income
• Failure to fill orders or meet deadlines
• Lost time by rescheduling missed jobs
• Lost time on accident investigations and reports by management
• Possible increased insurance premiums
• Public relations damage

You may also be faced with the costs of replacing an injured driver. Costs include advertising the position, time spent in the application process, driver performance tests, drug screening, background checks, orientation, training and much more.

In addition, you will temporarily lose productivity as a new driver will not be as fast and efficient as a veteran driver. And even veteran drivers that do return to work after an accident injury will most likely not be at 100 percent right away.

Injured drivers can also lead to increased workers compensation claims and law suits. Losing claims can lead to significant settlement costs, as well as attorney fees and time spent defending the business.

Improving safety also limits your liability to claims from the public at large. Improper safety can obligate your business to pay damages to people injured in an accident and property damages. Settlement costs for hospitalisation, pain and suffering and other injuries can quickly spiral out of control and ruin your business.

By focusing on safety, your business can decrease insurance costs. An outstanding safety record can lower your risk to insurance providers which may result in lower premiums. In addition, many insurance companies offer rate reductions for additional safety equipment including GPS tracking devices.

A poor safety record may serve as a red flag to clients. Improper safety can result in interrupted service to clients and prompt them to search for other vendors. If your business has a great safety record it can help you keep client contracts and increase renewals.

Government Regulations

Government has long been a proponent of safety. In the UK, the Road Vehicles (Construction and Use) Regulations lay out safety and maintenance requirements for work vehicles. And in Ireland, work vehicle safety is covered under the Safety, Health and Welfare Work Act 2005.

By law, every employer must make sure that work equipment is maintained in an efficient state, in efficient working order and in good repair.

Unfortunately, accidents are simply an eventuality if you have a vehicle fleet. However, you can reduce your exposure to accidents and violation by utilising proven safety measures.

GPS vehicle tracking is a proven, cost-effective way for businesses with vehicle fleets to improve safety in the three areas that cost businesses the most: driver behaviour, vehicle maintenance and asset safety.

Improving Driver Behaviour and Reducing Speed

According to the Large Truck Crash Causation Study (LTCCS), 87.2 percent of all at-fault large truck crashes are driver related.

Even with the most aggressive driving policy, you cannot be out on the roadway with all your drivers ensuring proper safety compliance. GPS vehicle tracking has been found extremely useful in giving business owners the ability to monitor and improve driver behaviour.

Speeding is a factor in nearly 23 percent of all at-fault large truck crashes according to the LTCCS. By ensuring your drivers obey the posted speed limits, you can significantly decrease the chances of your vehicles being involved in a serious accident.

Many GPS tracking solutions track vehicle speed and offer extensive alerting features that notify you immediately when a driver has exceeded a speed threshold. These alerts can appear immediately on-screen, be sent via email or mobile phone, or can be flagged in management reports.

Speed alerts allow you to immediately take corrective actions toward the offending driver. In addition, you can access a database of speeding violations for drivers to find those that

continually break speeding policy. This allows you to take more long-term corrective actions to break continual bad driving habits.

Speeding was a major concern for Ian Stirling, owner of Ian Stirling Haulage. Based in Renfew, Ian Stirling Haulage has provided haulage services to its clients throughout Scotland for over 20 years.

Mr. Stirling installed a GPS system on his fleet that includes speeding alerts to notify him if a vehicle exceeds a set speed threshold. The alerts can be set to notify him immediately of an infraction and are also flagged throughout the system's management reports.

As a result of installing GPS tracking, Ian Stirling Haulage has drastically improved safety for its drivers.

"Drivers can sometimes get distracted out on the road," said Mr. Stirling. "GPS tracking helps them keep their speed down and has even changed their driving style."

Driver Confusion and Unauthorised Usage

According to the LTCCS, driver unfamiliarity with the roadway is a factor in 21.6 percent of all at-fault large truck crashes. GPS vehicle tracking solutions that include exceptional mapping functionality can help reduce driver confusion in unfamiliar areas.

GPS tracking systems that use concise mapping, like Google Maps API Premier, can help dispatchers provide proper routing instructions to drivers and get them safely to the next job site. In addition, good GPS tracking includes up-to-the-minute traffic information that can help drivers avoid accidents and other hazards on the roads.

Unauthorised vehicle use by employees opens your business up to a wide range of liability issues. Many businesses allow drivers to take their vehicles home and many even allow drivers to use their vehicles for limited personal use.

Unfortunately, some employees abuse this privilege and use their vehicles for extended unauthorised journeys. If a driver gets into an accident during one of these journeys, your business may be liable for significant financial obligations.

Some GPS tracking solutions feature alerts that notify you when a vehicle starts up or moves during unauthorised hours. In addition, some systems can show you historic route information, so you can see exactly where your vehicles travelled during any time. You will know exactly when an employee used the vehicle, how long they drove the vehicle and where they went.

The historic journey function can even show you if drivers take their vehicles to unauthorised areas during the regularly scheduled work day.

For example, Best Electrical, an electrical contractor based in London, uses GPS vehicle tracking to monitor excessive vehicle mileage and unauthorised vehicle usage on off-days.

According to Robert Ranson, Director of Operations, Best Electrical mainly services maintenance and emergency calls. Technicians are available 24/7, which requires that his engineers take the company vehicles home.

Unfortunately, that meant Mr. Ranson had no idea if the vehicles were being used for unauthorised journeys or if employees were arriving to their first job site on time.

With GPS vehicle tracking, Mr. Ranson can use live tracking to monitor the location and status of all eight vehicles in his fleet. In addition, activity alerts let Mr. Ranson know if an engineer shows up to their first job on time or if they left their house on time in the morning.

"We have significantly reduced personal use of our vehicles since the drivers know I monitor usage," said Mr. Ranson. "And for my own sanity, I now know that my engineers are where they are supposed to be when they are supposed to be there."

Proof Against Fault

In addition to improving driver behaviour, GPS fleet tracking can be used as proof against fault in accidents and other claims.

Plote Construction Inc., a family-owned construction company based in the United States, used data gathered by its GPS tracking system to avoid serious financial liability resulting from an accident.

According to Eric Villa, Dispatcher at Plote Construction, one of Plote's trucks was involved in a serious accident two years ago. According to Plote's driver, a car was weaving in and out of traffic. The vehicle pulled in front of the truck and slammed on the breaks. The truck swerved to avoid hitting the car and the Plote driver lost control of the truck, rolling the semi over.

The driver of the car had a different story, claiming that the Plote driver was tailgating her and speeding over 110 km/h. Luckily, Mr. Villa had access to GPS tracking reports and could pull up the exact speed and location of their truck before the accident.

The report showed that Plote's driver never exceeded 110 km/h and was not driving aggressively. With this evidence submitted, Plote's driver was found innocent and the company avoided significant legal liabilities.

"Without the GPS tracking, we could have lost that case," said Mr. Villa. "It really worked out great for us."

In addition, Plote Construction often gets calls from customers complaining about cracks in their windshields caused by rocks that have fallen off the company's trucks. Mr. Villa is able to pull up the GPS route replay to see if a truck was in the area at the time and verify the complaint.

"Many of these types of complaints are blatantly false," said Mr. Villa. "When I tell the person that the GPS says no one was on that road at the time, they just hang up."

Proper Vehicle Maintenance

According to the LTCCS, just over 10 percent of all at-fault large truck crashes can be attributed specifically to vehicle factors. Improper vehicle maintenance can lead to accidents in several areas including breaks, tires, engine breakdowns and more.

High-quality GPS tracking solutions include maintenance scheduling that alerts you when vehicles are due for maintenance. Many times, alerts can be set by calendar time, engine on-time or mileage depending on the type of service needed.

With a proactive vehicle maintenance program, you can reduce the chance of your vehicles malfunctioning on the roadways and causing serious accidents. In addition, properly maintained vehicles help save your assets by keeping vehicles on the road to do more business and costing less money in repairs over time.

Protecting Your Mobile Assets

A much-often neglected aspect of safety is the protection of your own assets. Safeguarding your vehicles against theft is essential to prevent serious harm to your business. Stolen vehicles cost more than just the loss of the vehicle itself.

Most stolen vehicles also carry expensive and specialised equipment that must be replaced. In addition, a stolen vehicle means lowered productivity which may ultimately result in losing customers. GPS vehicle tracking provides clear benefits for asset safety.

Engine start-up alerts can be triggered to immediately notify you when vehicles are started during non-working hours. With up-to-the-minute tracking by high-quality GPS providers, you will know exactly where any stolen vehicle is located. Just by looking at the screen you can tell officers on the case where to look for your vehicle.

In addition, many high-quality tracking solutions have a route replay feature which can help you track down stolen equipment. In many cases, equipment from a stolen vehicle is unloaded before the vehicle is recovered.

With route replay, you can see where the vehicle stopped on its journey after being stolen and have police search those areas for the stolen equipment.

Signature Car Hire in Middlesex, UK offers a wide variety of prestigious vehicles for hire and utilizes its GPS tracking system to protect its assets. When your vehicle fleet includes brands like Ferrari, Lamborghini, Aston Martin and Rolls Royce, security becomes a top priority.

Deepak Bhatia, Managing Director of Signature Car Hire, knows the exact location of every vehicle in his fleet using GPS tracking. This is especially useful considering that their vehicles are very expensive and highly desirable to would-be thieves.

"We highly value the peace of mind we get from knowing where all our cars are at any given time," said Mr. Bhatia. "We get an enhanced feeling of security from GPS because the system offers many functions which are beneficial to our business."

The GPS system used by Signature Car Hire notifies the company if a vehicle goes outside areas specified for client use. For example, if a client says they are in Cardiff but the GPS tracking shows the vehicle located in Scotland, Mr. Bhatia can closely monitor the client and contact them for clarification.

In addition, should a vehicle move to a port - a sure sign of possible theft in progress - Mr. Bhatia would know immediately and be able to contact authorities for quick action.

Finding the Right GPS Tracking for Safety

Businesses all over the world are now using GPS vehicle tracking to improve the safety of their vehicle fleets. With new regulatory enforcement on the horizon and the prospect of losing your business to safety violations, it's more important than ever for businesses to take a long hard look at how GPS tracking can further improve their safety record.

There is no doubt that GPS tracking can help your company improve the safety of your vehicle fleet. However, there are a few things you should look for when choosing a GPS tracking system for safety reasons:

• Live Vehicle Tracking: Some GPS systems refresh vehicle locations at intervals up to 5 minutes. That allows too much time to elapse for a thief to be accurately tracked. The best systems refresh every minute to provide you with accurate, current tracking data.
• Tracking Speed: The GPS solution you choose should have the capability to track vehicle speed. In addition, the system should alert you when drivers exceed speed thresholds you set.
• Management Reports: A comprehensive reporting suite is essential for any great GPS tracking solution. The reports should highlight any improper driver behavior, including unauthorised usage and speeding. In addition, reports can provide you with accurate, location-based information that can stand up in the court of law should you ever need to defend your business.
• Alerts: Make sure the GPS system you install has robust alerting features. Alerts should be customisable with various delivery options including email, mobile and within the reporting functions of the system. You should be able to set alerts for when a vehicle is started or shut down and when a vehicle enters a specific point of interest.
• Route Replay: A good GPS tracking system will include the ability to track any historic journey taken by any vehicle. This allows you to see where any stolen vehicle has travelled in order to recover any stolen equipment dropped by the thieves.
• Maintenance Scheduling: Choose a GPS solution that includes a complete maintenance program. You should be able to set vehicle maintenance based on calendar time, engine on time or mileage as needed.

Commercial Loss of business

Theft, Burglary and Floods are not always straightforward. A business owner may be faced with loss of computer records, loss of stock and consequential losses.

Business interruption is inevitable, but what happens to the family and staff? Will the business have a future?

These events can cause closure for long periods. As a hardworking business owner you will ponder, how will you pay rent, pay your staff?

How you will live, start again quickly who will pay the high costs involved. You will need the expert guidance of a loss assessor to guide you through these areas

Flood Damage

Water damage to a home or business is not a pleasant experience. What may appear a minor incident can often turn into a disaster.

The first few days are often critical in making a successful claim. You want to be contacted within 24 hours of the incident to ensure the initial findings of the insurance company representative, fully covers all aspects of your claim.

You want a company that will ensure correct chemical sanitisation is carried out anti- fungal treatments are used prior to installation of humidifiers. This ensures dry rot wet rot is not given a chance to take hold.

Subsidence

Subsidence at your home can be catastrophic. A home is generally considered to be the most valuable asset people possess. Before an insurance company accepts you have a valid claim, investigations such as trial holes soil test drainage tests and monitoring will be carried out.

These can take a considerable period of time meanwhile you will endure the trauma of seeing your home falling apart. A loss Assessor will prepare your claim ensuring your interests are covered not just those of the insurance company.

You may wish to sell your house in the future. If the remedial works have not been carried out to the correct specifications it will be spotted by the purchaser's surveyor which may make selling difficult. Appoint a loss assessor to avoid this possibility

Fire

Fire is a traumatic disaster whether large or small which sometimes requires alternative accommodation, storage of property and protection against further damage or theft.

Damage can affect all areas, acrid and corrosive effects of smoke may linger and present health hazards as well as damaging contents and décor. Fire damage will cause unseen damage to electronic equipment which may be corrosive. It may not be visible when making an inventory but become obvious many months later when equipment fails and the claim has been settled.

Your assessor will ensure all electronic equipment is fully tested and cleaned inside despite no sign of external damage.

It is vital you call an assessor immediately after the fire and not wait until the insurance company adjuster visits. Remember stress levels should be minimal especially where children are part of the household. We can lift the burden from you contact us.

Personal Injury

Personal injury wherever and however caused is traumatic and should you seek our assistance we will immediately pass you onto our retained solicitors.

It is important that we start saving for a rainy day as early and as soon as possible. Personal finance management is essential in today's day. In today's capitalist society most people don't think twice about taking loans to buy unnecessary and expensive things. The recession however has woken up most people and scared them into learning to manage their finances. Because of the daunting nature of this task or because of insufficient knowledge most people never know how to effectively manage their finances.

Getting started

There are many steps to follow during personal finance management. These are some of the most essential ones you need to know to get you started.

Prepare your Budget

Preparing a budget will help you to curb overspending. Total your net income from all sources like work salary, any mutual funds, alimony, etc. Prepare a list of all your monthly expenditures and how much it is going to cost. These would include your bills, shopping and household budget, insurance premiums, etc. This is a great way to learn to adjust your expenses and create an estimate of your actual monthly expenses.

Saving

After preparing a budget the next thing you need to do is save money. Preparing a budget gives you an idea of where you overspend. Depending on your income, open a saving account and contribute a suitable percentage of it towards your account. This account should be used only in the case of emergencies.

Invest

Investing is a great way to earn a little extra income. The best place to invest is in the mutual fund of a reputed company. There is minimum risk involved when investing in mutual funds compared to other stocks. Further more you can leave the worrying caused as a result of volatile stock markets to experienced and professional fund managers.

Insure

Insurance is a great way to secure your future. It also reduces the risk of needing to empty out your saving account in the case of an emergency. You must at least take out insurance for your house, car and life. Choose a reputable company whose premium rates suit your income to avoid defaulting and wasting your money.

Tax Planning and Retirement Planning

Plan your tax so as to minimize the amount of your taxes. Reducing your income will bring down your taxable income. An easy way to do this is to contribute towards a retirement plan at work. As a result you can also plan for your retirement while planning your tax. You can also deduct your taxable income by donating to charity. State tax and mortgage interest will also deduct your taxable income. Having more dependents or getting married is another way to deduct your taxable income. You can also get tax credits for adopting children or college expenses.

Personal finance management gets more complicate every year; these simple tips are all you need to get started.

A good chiropractic business plan can help new chiropractors get on the right foot in starting and running a successful chiropractic office. It can provide a framework from which to make strategic decisions during the course of setting up a chiropractic clinic. Many chiropractors who fail to conceptualize a business plan find themselves struggling as they don't have a consistent chiropractic business model that delivers results.

Starting a chiropractic practice involves a lot of foresight and planning. It is not as easy to do as it was just ten years ago. Changes in insurance, attitudes, the economy and the way society makes buying decision demand new strategies for setting up a chiropractic office.

For example, there are less insurance companies now as many have merged. As a consequence, there is less competition, higher prices and less service. Insurance coverage for chiropractic has fallen by as much as 50% for some plans. In addition, high deductible plans are now much more common. Most people, especially in a tough economy, strive to spend the least amount of money on health care if they are covered by insurance, so they will typically forgo services that are not covered under their plan.

A good chiropractic business model will therefore take this into account and will advocate a set up that can absorb this loss of income. This basically means designing a low overhead chiropractic office. This can be done much easier today thanks to advances in the internet and wireless devices. Chiropractors must integrate available technology tools to help reduce their overhead. In doing so, it integrates the office with the technology that people increasingly rely on in their daily routines. This includes using Google, Facebook; iPhones and wireless internet.

If you are contemplating starting a chiropractic office, or are an established chiropractor in search of a better chiropractic business plan or chiropractic business model, consider the low overhead business model that leverages technology. As a doctor, it is necessary to not be too burdened with the stress of running your business so that you can truly focus on patient care.

Medications from Abroad - What You Need to Know

Many of us have heard about cheaper medications that can be purchased outside the United States. These purchases are usually made on-line and in most cases are made from pharmacies operating in Israel or Canada. Given the passing of the new "Health Care Reform" (which is a topic of much discussion by itself) - it is a good time to take a look at this phenomenon and see what it is all about.

The first thing one must ask oneself is why?

Why purchase medications from outside the United States? The answer is simple, one can get the same brand name medications abroad for far less money - in some cases even up to a 500% saving (yes you read that right). For example Azilect a Parkinson's medication manufactured by Teva (an Israeli company that happens to be the world's largest manufacturer of medications) can be purchased abroad for about $190 - where as that same medication cost $385 at your local pharmacy (that makes a 50% saving). Now the reason for this amazing saving is simple - prescription drug pricing in the US is not Government regulated therefore the prices they charge are high. Don't blame your local pharmacist - he is making a small margin for all the work he does.

You might not realize this but there are a number of reasons for one to purchase medications abroad. First of all, there are about 49 Million Americans that don't have any health insurance at all. The reasons why they don't have insurance are many -some are unemployed, or decided not to take insurance, some are self-employed the bottom line is that they don't have any coverage and medications without coverage are very expensive. So for them buying medication abroad can save them literally thousands of dollars.

A second group of people that can benefit from medications abroad are those people on Medicare who have reached the Medicare gap. The Medicare gap is a clever way the federal government gives people coverage - but does not give them coverage. It is commonly referred to as the "donut hole". The "donut hole" means that if your prescription medications reach the sum of $2,830 and until your durg medication cost pass $6,440 - one will pay 100% out of pocket (hence the terminology "gap" or "donut hole"). Furthermore, a Medicare patient actually pays the first $310 out of pocket as well - making the total payments up till $6,440 equal to $4,550 out of pocket. According to the new health care plan this is supposed to be phased out by 2020 - but many are skeptical about what will really happen.

The last group of people that can benefit from purchasing medications abroad are those people with a large deductible or a high co-payment. So for example if someone has a $2000 deductible on his policy and he needs to take $3000 worth of medication a year - if he can purchase his medications at a 50% discount he will be paying $1500 annually and he will save himself $500 - and not have to bother with insurance company reimbursement.

One of the questions commonly asked by people is "How do I know the medications I purchase from abroad are good quality?" There are a couple of things you need to look out for.

1. The source of the medications and the type of medications. The source of the medications is exactly that - where do they ultimately come from? For example, one can purchase medicines from a foreign pharmacy in Canada and the medications can come from India, the Philippines, Turkey or Israel. Therefore you should not say - I will not purchase medications from abroad - rather you should make sure where the medications are supplied from. Purchasing medications from Israel is a very safe way to go as Israel is a world leader in Bio-Technology and is proud to have the world's largest generic (and lately original) pharmaceutical company - Teva.

2. The type of medication you are purchasing. If you are buying a branded medication (say Lipitor) then it is the same as if you buy locally (in some cases it is sold under a different name outside the US - but it is still the same medication). The medication is made under license or by the manufacturer in plants throughout the world. If you are buying a generic brand then you should be sure that it comes from a pharmacy in a country that has standards acceptable to you (like Israel).

3. Dosage and strength of the medications you are purchasing.

4. Pack size, At times you will find that medications with the same name can be sold with a different pack. For example, you might be purchasing your medication in a standard 30 day pack - while abroad it is sold in a 28 day pack

The way to avoid any difficulties is to deal with a reputable pharmacy that has a clear description of the medication on the company web site, or by calling and speaking directly to the pharmacy. You should never purchase prescription medication from a store that does not require you to send in (or fax) an original prescription.

In general ordering from a pharmacy operating outside the US is easy, convenient and can save you a substantial amount of money. The process is straight forward and requires you to provide a current prescription and some information about yourself and your credit card. In most cases the medication should be delivered to your door in a week or so. Be sure to pay attention to delivery times as regular international delivery (as opposed to expedited shipping) can take up to 2-3 weeks to arrive. This should be OK - if you don't need the medication urgently.

One of the better places to purchase medications is from Israel whose health ministry closely follows FDA guidelines. Furthermore, Israel is home to the worlds largest generic manufacturer - Teva.

In conclusion, purchasing prescription medications outside the United States is convenient, easy and can save you money. Paying attention to which pharmacy you use and some minor naming and packing changes can really make a difference to ones budget during these difficult financial times.

Reverse Mortgage Pros and Cons

Understanding reverse mortgage pros and cons is becoming more important what with America's population aging, home prices falling, the stock market crash of 2008 still not having been recovered from, the value of the dollar diminishing and a whole host of other financial concerns, it is likely that now more than ever the answer to the question "how are we going to live the life we hoped for?" may be found in the reverse mortgage. This often misunderstood and sometimes feared product could just be the difference between being comfortable in retirement and not retiring at all.

Let's take the reverse mortgage head on and look at the pros and cons. By reviewing the advantages and disadvantages of the reverse mortgage you will not only gain a better understanding of the powerful impact it could have on your life, but you should be able to set aside any fears you have had in the past. With a little counseling from a qualified expert you should then be able to determine without a doubt if the reverse mortgage is the right move for you.

I like to focus on the positive. So let's look at reverse mortgage pros first.

• It allows you to convert home equity into non-taxable income without having to sell your home
• The reverse mortgage allows many people whose home is their largest asset to convert that highly illiquid and passive asset to a very liquid asset that can be actively invested.
• With a reverse mortgage you never have to pay the loan back as long as you live in the property as your primary residence, keep the home maintained, and pay your taxes, insurance and HOA dues (if applicable).
• This one's the biggie; you will never...never under any circumstances, owe more than your home is worth. Neither will your heirs in the event you leave the home to them in your estate.
• Here's another biggie; you will never again have a mortgage payment.
• Something many people don't understand is that you can actually sell your home or even refinance out of a reverse mortgage in the future. Obviously you will need enough equity or cash on hand for either situation, and in the event you wish to refinance you would likely need to qualify for the new loan.
• This is a grossly underutilized retirement tool: you can place a reverse mortgage on an owner occupied income property of up to four units.
• You can use the proceeds of the loan to make maintenance repairs to your home to get it up to FHA appraisal standards.
• The loan is paid in full, along with any capital gains upon the homeowner's death. This is an effective way to defer capital gains to death and possibly completely remove them from the estate.
• There are no income or credit requirements* for a reverse mortgage.
• You can purchase a new home with a reverse mortgage. Again, without income or credit requirements.
• The note has no recourse. This means the lender cannot seek assets other than the available equity in the home for repayment of the loan. Again, the borrower and their heirs will never owe more than the home is worth.
• That being said, in a falling equity environment, the lender is the only party with asset devaluation risk.
• In many cases you will not only rid yourself of your current mortgage payment, but you may actually have the ability to structure the loan to pay you a monthly amount.
• Cash flow from the reverse mortgage will not affect social security and Medicare.
• There are no prepayments penalties
• Finally, all closing costs can be paid for with proceeds from the loan assuming there is sufficient equity to do so.

*While there are no restrictions regarding credit scores or history you cannot complete a reverse mortgage and have an outstanding federal lien or judgment. The government must be paid in full before or at closing.

O.K. Now for the negatives; there are some, although generally speaking, the reverse mortgage is either a great option for you and has very few drawbacks or it is simply not the right option. Here we go:

• As with any loan, there are costs associated with the reverse mortgage. These are generally in line with those of a conventional or FHA refinance and they are considerably lower than those of selling your home.
• Interest accrued on a reverse mortgage cannot be deducted until the loan has been paid in full.
• While there are no income or credit requirements for the loan, the borrower does need to have enough equity in the home to facilitate the mortgage. This is a rough estimate and by no means should it be used to disqualify yourself, but generally the home owner should have 30% give or take 5% equity in the home. In other words, if your current loan balance is higher than 70% of the value of your home there will need to be additional cash brought to the table.
• The home owner still needs to pay property taxes, home owner's insurance, and any applicable HOA fees after taking out their reverse. I'm reaching here. It's not really a con but it is something of which you should be aware.
• The home will need to be appraised and while you can escrow for some items to be repaired, a home in disrepair could be unqualified or could fall short on the necessary equity for closing.
• There is a mortgage insurance expense with a reverse mortgage as it is a HUD loan. This effectively increases the interest rate on your loan.
• There is an age requirement. The youngest homeowner must be 62 years of age or older to qualify. The calculation used to determine the amount of your loan is based on the youngest owner.
• A reverse mortgage may affect needs based programs other than Social Security and Medicare. It would be worth a phone call to your case worker if you are a recipient just to be on the safe side.
• On purchases there are no seller contributions allowed.
• Finally, the loan will reduce the equity in your home.

After reviewing the lists of advantages and disadvantages for reverse mortgage loans if you think it might be an option for you your next step would be to contact a reputable lender in your area. Then you will be given contact information for a couple of local counseling agencies that will act as a third party information source. The process is pretty simple and may just be the best thing you ever did for your retirement plan.