5 Surprising Ways To Put a Reverse Mortgage to Work for You

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonOne of the biggest perks of a reverse mortgage is it’s up to the borrower to decide how to use the funds, as well as how to receive those funds.  And with the rapidly improving reputation of today’s reverse mortgage, those uses are being suggested more often and are becoming more creative.  This wonderful financial tool, available to seniors 62 and over, is now being widely accepted by financial advisors across the nation.  Here’s a few reasons why…

1.) A reverse mortgage can eliminate existing housing debt.  In 2010 42% of seniors age 62 and over had housing debt.  This is a dramatic increase compared to the 1992 estimate which was only 24%.  Housing debt can be a huge financial burden to aging Americans, whether it’s because they’re on a fixed income or because it interrupts the dreams they once had for their golden years.  Using a reverse mortgage to pay off a conventional mortgage, or even a HELOC (Home Equity Line of Credit), can relieve some serious pressure in the borrower’s life, as well as adult children.

2.) A reverse mortgage line of credit can protect a retirement portfolio.  During the 2008 economic crisis we all saw first hand how retirement investments are not guaranteed.  But an FHA insured reverse mortgage line of credit is.  Using home equity to take out a reverse mortgage line of credit now offers a second level of protection against economic pitfalls and the impact they may have on a retirement portfolio in the future.   And unlike a conventional home equity line of credit, the reverse mortgage line of credit is not accompanied by a loan payment.

3. ) Age at home and fund in-home care with a reverse mortgage.  One of the most common things I hear from those seeking a reverse mortgage is that they want to age at home as long as possible.  Why wouldn’t they?  The funds from a reverse mortgage can allow the elderly to do just that and fund the care they need if assistance becomes a need.

4.) Delay Social Security payments until the maximum benefit is available at age 70.  The funds from a reverse mortgage can be used as a bridge to put off tapping into Social Security payment before they’re worth their max.  Then once the Social Security is accessed, the borrower will receive funds from both.

5.) Reduce tax burden by reducing taxable income.  The funds from a reverse mortgage are not considered income, meaning they are not taxed.  This can be a huge benefit when other options to bring in cash include taxable incomes such as working and withdrawing from taxable retirement investments.

For seniors 62 and over reverse mortgage is an excellent option.  Homeowners can access the equity in their home, live mortgage and loan payment free, and no repayment is due until the last borrower passes or permanently leaves the home at which time there are options.  For some retirees, it could mean the difference between living and living well.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

How are Social Security, Medicare, and Pensions Affected by a Reverse Mortgage?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonA very common concern among seniors and adult children when considering a reverse mortgage is how it will affect social security, Medicare, and even certain pensions.  For many seniors, these benefits are a large part of their income. Fortunately, because the funds from a reverse mortgage are NOT considered taxable income, a borrower’s benefits will not be affected when taking out a reverse mortgage.

On the other hand, borrowers who have Medicaid, TANF, Food Stamps or SSI may see those benefits affected by this additional income.   Because these programs are government sponsored programs with strict approval guidelines based on all sources of income, even non-taxable income, there is a possibility the additional cash flow will need reported.  Other supplemental and assistance programs would need to be addressed on a case by case basis.  Working with a reputable reverse mortgage lender and required third party counseling will ensure all your questions are answered thoroughly and honestly.

Reverse mortgages are available to homeowners (married or single) 62 and older as long as their is adequate equity in the home, it is the primary residence, and it is a HUD approved property type.   The proceeds can be received as monthly installments, a reverse line of credit, a lump sum, or to purchase a new residence – and can be used for any purpose the borrower sees fit.  This FHA insured loan allows the borrower(s) to live mortgage payment free.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

 

Are Funds From Reverse Mortgages Taxable?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonIt’s the New Year!  This means new possibilities and new opportunities are abound!  But it also means it’s time to get business in order in preparation for tax season.  It’s common during this time of year for me to receive many questions regarding taxes and reverse mortgage– from both those considering a reverse mortgage, and those who already have a reverse mortgage.

Here are the two most common questions I get:

Are the funds from my reverse mortgage considered “taxable income”? 

No.  This can often be a huge benefit of a reverse mortgage – the funds received are NOT taxable, meaning they do not count as income.  This can be a positive compared to other types of retirement income, including various investments, some of which are taxable.  Because the funds received from a reverse mortgage are technically an advance on a loan, any payments or lump sums received are not taxable income and do not need to be reported on a tax return.  They also typically do not affect Social Security or Medicare payments.

Is the interest from my loan deductible? 

No.  Because reverse mortgage holders do not make monthly mortgage payments and typically the interest is not paid until the loan is paid in full, the interest from a reverse mortgage loan is not deductible on a tax return.  This is also the case with a reverse mortgage for purchase loan.

FHA insured reverse mortgages are available to homeowners 62 and older in the Seattle, Washington and surrounding areas.   These loans allow the borrower to live mortgage payment free and receive their loan payment in monthly installments, a line of credit, a lump sum, and even as a tool to purchase a new home.  All borrowers are required to participate in third party counseling to ensure all their questions are adequately answered before making a decision.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.