Reverse Mortgages Basics
- 9 August 2010
Reverse mortgages are loans against your home that require no repayment for as long as you live there. As opposed to traditional mortgage loans, reverse mortgages does not require proof of income and are based solely on the equity of your home. There are no monthly payments to make as the mortgage will only due when the borrower moved out from the property or in the event of death.
US seniors over the age of sixty two are eligible for reverse mortgages provided they have their own single family dwelling. No health requirement is needed, and you get to keep your Social Security and Medicare benefits if your reverse mortgage is approved. Some benefits, however, such as Supplemental Security Income (SSI) and Medicaid can be reduced under specific circumstances. Tax liability for monies received through a reverse mortgage are a non-issue, as loan advancements are not taxed, although interest on the loan is consequently not tax deductible.
There are no income requirements to be eligible for a reverse mortgage loan. You may be eligible for a reverse mortgage even if you still owe money on an existing mortgage. The reverse mortgage loan must be substantial enough to pay off the existing loan completely, however.
The benefits of a reverse mortgage include increased cash flow almost immediately while many other options are on a fixed monthly income. This way it will fully utilize the equity value in your home. Several options exist to help seniors to plan for their advances so that they can fit into their budgetary concerns and cash flow needs.
Most may feel that borrowing against their home is a risky action to take, especially when they are in their twilight years.
Since they are not borrowing against future income, reverse mortgage does indeed hold minimal risk and many who choose this type of mortgage are able to enjoy what they have worked all their lives for in their post retirement years.
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- Existing Mortgage,
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- Medicare Benefits,
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- Reverse Mortgage Loan,
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- Traditional Mortgage,
- Twilight Years
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