Reverse mortgages are designed for homeowners at least 62 years of age with moderate to significant equity in their homes who want to eliminate their mortgage payment and/or receive additional cash.
You can use the money you receive from your reverse mortgage any way you would like, everything from medical bills, to credit card debt to remodeling your home. There are no limits to how you can use your proceeds.
Any existing mortgages will be paid off at closing. Then you’re free to enjoy the financial freedom that comes along with eliminating your mortgage payment. You are still responsible for maintaining the property, paying property taxes and insurance.
Not necessarily. Consult your financial advisor to get a full understand about your options.
Vacation homes or other secondary residences, and rental properties of more than four units do not qualify.
Currently the IRS treats monies received from a reverse mortgage to be loan advances and not taxable income. We recommend a tax advisor for specific questions.
A homeowner who has put the home in a living trust can usually take out a reverse mortgage, subject to review of the trust documents.
The proceeds from a Reverse Mortgage do not affect these benefits. It can affect Medicaid and Supplemental Security Income. We recommend that you consult your financial advisor.
Interest is not deductible until you pay the reverse mortgage. You should consult a tax advisor for detailed tax advice.
The borrower will pay back the cash advances they have received plus accumulated interest and any upfront costs that were financed initially will also be added to the loan balance.
All reverse mortgages are “non-recourse” loans which means that the original borrower (s) will never owe more than the home is worth, regardless of the loan balance. Once the last owner(s) passes away or moves out of the home permanently, the heirs can sell the property and pay off the existing mortgage balance or they can refinance the property. If the heirs choose to keep the property, they will have to refinance the entire amount of the existing mortgage balance regardless of home’s appraised value. Heirs can buy the property for less, up to 95% of the current appraised value of the home.
You are required to pay your property taxes, keep current the property insurance in place, maintain the home and notify the lender if you will be away from the property for an extended period of time.
The loan is due and payable when the last remaining borrower sells the property, permanently leaves the home, or passes away. Until these events take place you live in the home and make no payments to the lender. You are still responsible for maintaining the property, paying property taxes and insurance.