A Reverse Mortgage (RM) is a wonderful product that frees up your resources, and helps you to have the retirement you have always dreamed of. It can provide funds for travel, visiting your grandchildren, renovating your home, medical costs, aging in place, or anything else you wish to accomplish. The RM may sound like a great program, but will it affect your retirement benefits like Medicare or your Social Security check? Fear of the unknown can cause you to miss out on a program that could improve your life dramatically. The following are answers to commonly asked questions about the RM effect on your benefits and taxes.
Does a RM affect my Social Security or Medicare benefits?
No, a reverse mortgage simply does not impact your regular social security or Medicare benefits.
Does a RM affect Medicaid or SSI income?
There are special programs for low-income seniors like Medicaid or supplemental security income (SSI) that are only for those under a certain income threshold. Reverse Mortgage money is considered a loan and therefore does not count as income. SSI or Medicaid will check bank account balances and if you exceed a specified amount you can be in jeopardy of losing those benefits. To avoid this, simply disperse only the funds that you will use immediately. When you are on SSI or Medicaid, you can use the reverse mortgage funds to eliminate your monthly mortgage payment. The rest of the money you qualify for you can be left it in a Reverse Mortgage Line of Credit; you should take out the money only when you will immediately use it, and avoid any issues with a bank account balance being too high. Any money left in the RM LOC currently grows by over 5% compounded annually ( rate subject to change) !
Do I have to pay taxes on my RM proceeds?
Reverse Mortgage proceeds are considered loan advances to you and not earned income. Thus, the payments you receive are not taxable. Consult with your tax advisor for further details.
Can I deduct mortgage interest?
The interest charged on a reverse mortgage cannot be deducted until it is actually paid. Therefore, if you were to refinance your reverse mortgage and get more money out, at that point, interest would be paid and you could deduct the interest for that year. Consult with your tax advisor for further details.
There are many seniors that would benefit form a RM but choose not to because they incorrectly believe it will affect them negatively. Feel free to share this article to help more retirees understand how a RM could positively impact them and their retirement plans.
To see what you qualify for on this FHA program contact Robert Krepps (877) 567-7476 or firstname.lastname@example.org