Real Estate - Get In The Know
Financing
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Reverse Mortgages - Tax Free Income For Seniors
A reverse mortgage is exactly what the name implies. Rather than you paying a monthly sum of money to a mortgage company, a mortgage company pays you. There are three types of reverse mortgages and all have the same eligibility requirements.
You must be at least 62, live in, and own, your home. You must also have equity in your home. There are no income restrictions such as those imposed by Social Security and the funds are tax free since they do not involve additional features such as an attached annuity. They also do not affect your social security benefits nor your Medicare entitlements. They may however affect Medicaid benefits.
A reverse mortgage is a loan which allows senior citizens to convert part of their equity into cash without having to sell their home. Because it is a loan “in reverse” you are receiving a monthly sum and not paying a monthly amount while you live in your home.
However, this loan must be repaid and repaid with interest should you sell, die, no longer live in the home as your principal residence or reach the end of the pre-selected loan period. You remain responsible to pay real estate taxes, insurance and all maintenance expenses which, of course, you would have to pay with, or without, a reverse mortgage.
This is as close to win-win as you can get. You enjoy a monthly sum, tax free and non-repayable until a date sometime in the future, while staying in your home.
It doesn’t take a rocket scientist to realize anyone who is cash poor but house rich should at least investigate this tool. However, like any other instrument involving your signature on the dotted line involving financial obligation, you must have some preliminary information. P