Reverse Mortgage Pros & Benefits
Reverse mortgages have long suffered from bad perceptions due to misunderstanding by media and consumers. While even reverse mortgage experts will agree that reverse mortgages are not for everyone, the loan can be very beneficial to those in the right situtation and need.
Since a reverse mortgage is converting your home equity into liquid assets (cash or line of credit), there is no tax on money received from the loan since the equity is already yours.
No Affect on Medicare or Social Security
Medicare and social security eligibility is not affected with a reverse mortgage. However, for other government programs that are calculated based on "need" such as Medicaid, may be affected. We recommend speaking with a financial advisor or CPA to understand how a reverse mortgage will affect your personal situtation. Generally, if one takes the lump sum reverse mortgage, they would need to spend it all almost right away in order to stay qualified for Medicaid. Again, we recommend talking to a professional advisor to fully examine your situtation.
Unlike a traditional mortgage where you are making monthly payments, you do not have to pay back your lender until the home is sold, you move out, or all borrowers on the loan dies. Note that home owners insurance, any HOA fees and property taxes still most be paid when due or else the property may be foreclosed.