What Is a Reverse Mortgage?

Generally, a reverse mortgage is a loan a person takes against the value of their property. It allows the borrower to access the unencumbered value of their property without having to make monthly mortgage payments.Ā San Diego Reverse MortgageĀ can be a great way for older homeowners to use their home equity. However, there are some eligibility requirements that homeowners should know before they apply.


First, knowing how much you owe on your current home is important. This amount will be considered when you apply for a reverse mortgage loan. You may be turned down if you owe more than the home is worth. Second, you must meet government standards and make sure your home is safe and sound. This means that you should have ground-floor windows that lock and that the home has no structural issues. You’ll need to meet FHA property requirements if your home has more than four units. Third, you’ll need to have a minimum of 50% equity in your home. This includes both the amount you paid on your mortgage and the value of your home.

Unlike other loan advances, the proceeds of a reverse mortgage are not taxable income. This means they won’t affect your Social Security benefits, Medicare benefits, or Supplemental Security Income. But there are other tax considerations to consider. You will still have to pay for property taxes, homeowners insurance, and maintenance on your home. If you are using the loan proceeds for home improvements, you can deduct the cost of those improvements. However, you may be limited in what you can deduct.

There is also the question of tax deductibility of real estate taxes. If you pay the taxes directly, you can claim them when they are paid. However, if you pay the taxes through your reverse mortgage, you can claim them only when your home is sold. Using a reverse mortgage to pay your property taxes is not as easy as it sounds. While it is possible, there is a caveat.

In order to qualify for a reverse mortgage, you must meet certain credit and insurance requirements, including a life expectancy set-aside (LESA). In addition to being the smartest home loan you can get, a LESA will allow you to save money and pay off your mortgage in one fell swoop. This is one of the most important benefits of using a reverse mortgage.

If you’re not lucky enough to have a LESA or are looking for a better alternative, your best bet is to shop around for a HECM (Home Equity Conversion Mortgage) reverse mortgage. Unlike other mortgages, the HECM can pay off your property taxes. It may also require you to meet certain conditions, such as selling your home within 12 months. HECMs, or Home Equity Conversion Mortgages, are the lowest-cost reverse mortgages. HECMs are federally insured, which means they are protected from foreclosure. They are only available from HUD-approved lenders, and the borrowers must undergo counseling.

These mortgages are used to help older homeowners cover expenses. Depending on the type of loan, borrowers can borrow between $25,000 and $822,375. However, the amount of money a homeowner can borrow will vary depending on the value of their home. HECMs are available on single-family homes, condominiums, townhomes, and multi-unit properties. The money can be used for a variety of purposes, including home improvements, consolidating debts, and supplementing income. However, borrowers must maintain their homes and pay taxes.

In addition to these costs, lenders also charge fees for HECM monitoring. These fees are added to the loan balance each month. These fees can range from $25 to $35 per month. These fees vary by state and lender. They may also include appraisal fees, title insurance premiums, and escrow service fees.

Leaving your home to an heir could have dire consequences, especially if you have a reverse mortgage. Whether you’re a homeowner or an heir, you may need to sell your home to pay off the loan balance. The good news is that the mortgage is non-recourse, which means that the lender cannot go after your other assets to recoup the balance. However, it’s a good idea to consider whether or not you want to keep your home.

You can do several things to make your home more marketable to a buyer. If you’re planning on leaving your home to an heir, discussing the pros and cons of the mortgage with your children is a good idea. You can also ask your heirs whether or not they want to keep the home. If they do, you can pay off the reverse mortgage with another source of funding.