Reverse Mortgages May Bring Concerns For Other Family Members

When a senior considers applying for a reverse mortgage, there may be questions or concerns the other family members may express. Below are some facts about reverse mortgages that may help those family members better understand the process.

When a senior does take out a loan, their home is theirs to keep as long as they live and maintain that home. They do not have to give up the title, or sell the house.

The heirs to the senior will receive any profit from the sale of the house to pay off the debt after the borrower dies or is placed under the care of others.

There are no taxes to pay on the loan. The money received from the reverse mortgage is tax-free income. However, it is wise to visit with a tax consultant for an individual assessment.

There are no payments to be paid by the borrower. The loan is deferred until the borrower dies or no longer lives in the house. In addition, the borrower will never pay more than the home value.

If the borrower or others choose, the loan can be paid off in advance with no penalty.

There are some borrowers who can receive a reverse mortgage without having to pay any money upfront. Closing costs will vary, based on the amount of the loan. Borrowers do have the option of adding any extra costs onto the loan. It is best to talk with a loan specialist.

Reverse mortgages can be obtained from the Federal Housing Administration (FHA), Fannie Mae (FNMA), or other private corporations. Again, talking to a loan specialist will help you understand better how each organization works.

The seniors Social Security and Medicare benefits will not be affected by the loan. Social Security payments are what the senior has earned during a lifetime of work and therefore, belongs to him or her.

To make sure the senior thoroughly understands the process, it is required that they meet with a counselor approved by HUD before signing any papers. This can be done in person, or on the phone.