Planning — and Paying For — Your Funeral While You’re Alive & Well
You’re healthy. Life is going well. You're thinking about the future. Believe it or not, it’s the ideal time to preplan your funeral.
When a family member passes away, loved ones have major decisions to make. These can be especially difficult if you haven’t shared your wishes — cremation versus burial, a religious service or not, even the type of music or flowers you’d prefer for your final send-off.
That’s why professionals such as organizers and estate planners recommend making decisions in advance about your likes, dislikes and preferences, clearly documenting them and keeping the information with important paperwork such as your will and medical directive.
Reducing your family’s burden during a stressful time
With average funeral costs in the U.S. ranging from $6,000 to $10,000, arguably the most difficult question family members are asking themselves: How do we pay for all this?
A funeral can create a complicated financial situation. But by planning in advance for the inevitable, you can ensure that your family has all the pieces in place to give you a respectful and dignified service, without scrambling for the funds to do so.
Here are today’s most common approaches to prepaying a funeral:
- Buy a life insurance policy and designate the proceeds for funeral expenses.
- Contract with a funeral home for what the industry calls a pre-need plan, where you make your selections and pay upfront.
- Set up a burial “trust fund,” which is simply a bank account with a beneficiary who is tasked with paying the funeral expenses upon your death.
What do all these prepayment approaches have in common? They all require an upfront investment, which can be a fairly significant sum.
Forging a financial plan — sooner rather than later
Americans age 65 and over have an average of $130,000 in home equity. For many, home equity makes up a substantial component of our wealth. So, when you need to free up funds, for example to pre-pay funeral expenses, a reverse mortgage loan can be a smart option, because it lets you tap into the equity you’ve built up in your home.* And while you’re at it, you can get funds for other things — home improvements, medical expenses and/or consolidating debt to reduce monthly bills.
Exclusively available to homeowners and homebuyers age 62 and older, a Home Equity Conversion Mortgage (HECM) type of reverse mortgage allows you to borrow against the equity in your home. In doing so, it provides funds that you can use today, or a line of credit that will be there when you need it — all while you continue to live in and own your home. (As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance, and maintenance.) With the funds at your disposal, you can choose to put money aside, pre-pay funeral expenses, or set up an account exclusively to cover funeral expenses.
While a HECM can be a great option for the right borrower, there are limitations on who can borrow and how much. That’s why Reverse Mortgage Funding also offers another type of reverse mortgage loan — Equity Elite, which makes accessing home equity funds easier and more affordable for many, and may be more suitable for certain borrowers. This loan is intended for homeowners and homebuyers as young as 60,** and is designed specifically for condominiums as well as higher-value homes. Available in certain states, Equity Elite offers loan amounts of up to $4 million (depending on home value), as well as no Mortgage Insurance Premium (MIP) fees and an option called Equity Elite Zero† that eliminates nearly all up-front costs. In addition, the eligibility requirements are designed so more condos qualify.
No matter how you go about financing your plans, chances are your heirs will be thankful and relieved to learn that everything is in place when the time comes.
Peace of mind for you and your loved ones
By understanding the different financial options available to you, you can take comfort in knowing your future wishes are carried out. RMF can help. To learn more, call (888) 277-1567 and set up a convenient phone appointment with one of our licensed loan specialists.
SEE WHAT FUNDS YOU MAY HAVE AVAILABLE
If you have equity in your home and believe you meet the eligibility requirements, a HECM may be the option that could help you retire smart.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans live the retirement lifestyles that they imagined and deserve, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 96% customer satisfaction rating; a 5-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call (888) 277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.
*Death of a borrower is a maturity event that requires repayment of the loan.
**Not applicable in all states; some states may impose a higher age requirement. Visit www.reversefunding.com/equity-elite for details.
†With this pricing option, borrower receives a lender credit covering nearly all closing costs. There is a non-refundable independent counseling fee of approximately $125 on average, which the borrower pays directly to the counseling agency. Terms and conditions apply. Not available in all states.
Equity Elite Reverse Mortgage (“Equity Elite”) is Reverse Mortgage Funding LLC’s proprietary loan program, and it is not affiliated with the Home Equity Conversion Mortgage (HECM) loan program, which is insured by FHA. Equity Elite is available to qualified borrowers who also may be eligible for HUD, FHA’s HECM program or are seeking loan proceeds that are higher than HUD, FHA’s HECM program limit. Equity Elite currently is available only for eligible properties in select states. Please contact your loan originator to see if it is currently available in your state.
Upon a maturity event, any non-borrowing individuals with an ownership interest in the property, including non-borrowing spouses, will have 90 days to purchase the property from the estate or, if the non-borrower inherits the property, pay the loan in full using any sources of funds available to them. Any non-borrowing individual, including a non-borrowing spouse, should have a plan to pay off an Equity Elite reverse mortgage upon the borrower’s death or any other maturity event. If the non-borrower is unwilling or unable to purchase the property or pay the loan in full, there is no protection for the non-borrower (including a non-borrower spouse) to maintain an interest in the home or to continue residing in the home past the maturity event and the non-borrower may be evicted upon foreclosure. The FHA HECM program has protections in place for certain non-borrowing parties, so a reverse mortgage applicant with certain non-borrowing parties should strongly consider a FHA-insured HECM loan (see HECM guidelines or ask an RMF representative for details). Under the Equity Elite reverse mortgage loan program, a maturity and/or default event occurs when the last surviving borrower no longer lives in the home as his or her primary residence for at least 12 months, the property charges (including taxes, insurance, or any other property charges) are not paid, required repairs are not completed or the property is not maintained, or any other maturity and/or default event, as specified in the Security Instrument, occurs.