Features Of A Reverse Mortgage

Features Of A Reverse Mortgage

Reverse mortgages were developed to assist senior citizens financially from housing and
character repairs and maintenance to supplementing fixed incomes. Reverse mortgages are for senior citizens who are 62 years of age or older and who reside in their homes. Reverse mortgages features have some advantages and disadvantages.

Some advantages of reverse mortgages are that they for one are not taxable. They do not affect retirement benefits either such as Social Security or Medicare. You do not have to repay the loan until you sell the home or when the home is no longer your dominant residence. One exception to this is that you can live in a nursing home for a maximum of 12 months without penalty for HECM loans. This is not applicable to the other two types of reverse mortgages.

Some disadvantages or things to consider when contemplating a reverse mortgage is for one the costs and fees associated with obtaining the loan. There are usually originating fees, service fees, and closing costs for obtaining the loan. There are also interest charges on the amount you borrow. This interest accrues on the increasing balance and the amount you owe can rise quite rapidly and is not tax deductible. Another important disadvantage of reverse mortgages is that it depletes the equity the owner has in his/her home diminishing ones assets.

These features of reverse mortgages should be weighed out and compared to the goals of the
possible borrowers to determine if reverse mortgaging is right for them. For more information, contact a reverse mortgage lender or counselor.

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