Everyone dreams of owning a home, and having acquired one, likes to retain ownership well past his retirement when his income will stop unless he is a pensioner. Here, a reverse mortgage comes in handy, helping a retire who is past 62 years of age get a steady stream of income, even as it allows him to remain the owner of the asset.
The flow of income helps the owner of the property to manage his monthly expenses, till he is alive or until the time he moves over or sells his home.
The absence of income is not a hurdle for a reverse mortgage. As the value of the property determines the eligibility for a reverse mortgage, the homeowner’s income status is irrelevant.
Lump Sum Payment
The homeowner opting for a reverse mortgage can get the money in one lump sum or as a line of credit. This helps him to meet huge medical expenses if any, repay existing debt and plan his investment.
Additional borrowing powers
The borrowing power of the homeowner increases with advancement of his age and the increasing size of home equity. If money is borrowed under Home Equity Conversion Mortgage scheme, then the borrower need not worry even if the sale price of the home falls short of the loan amount, the Federal Housing Administration will make good the shortfall as the HECMs are insured by the regulator.
Income is Tax-Free
Income received from the lender under a reverse mortgage is tax-free. However, the tax on property and other payments, such as homeowner’s insurance premium, are to be met as scheduled, and any lapse there could result in the termination of the mortgage.
Social Security and Medicare benefits stay intact
Another prominent feature of a reverse mortgage is that it does not affect one’s Social Security and Medicare benefits.
Comments are closed.