Are Reverse Mortgages taxable?

Reverse mortgage proceeds are not taxable because they’re not considered income, but rather, a loan.

Reverse mortgages do not affect entitlement programs such as Medicare. However, certain need-based government aid programs, such as Supplemental Security Income (SSI) and Medicaid, may be affected. Additionally, your eligibility to participate in any real estate tax deferral program offered by your city or county may be impacted. This information is not intended to provide any type of advice, and we recommend you consult with your Medicare, Social Security or Medicaid program administrator to determine the specific rules.

Does the bank own my home with a Reverse Mortgage?

When you get a reverse mortgage, you still own your home. The title remains in your name. And as the homeowner, you will be expected to continue to pay property taxes and insurance and perform general maintenance and upkeep of your home, just as you do today.

If I still owe money, can I get a Reverse Mortgage?

You may be eligible for a reverse mortgage if you still owe money on your existing mortgage. However, the existing mortgage balance must be paid off at closing. You can choose to pay off the balance with funds from the reverse mortgage or another source.

Additionally, no income or credit score requirements are necessary to be eligible for a reverse mortgage.

What can I buy with the money?

A benefit of reverse mortgages is the freedom to use the funds however you want. Many people choose a reverse mortgage to eliminate their monthly mortgage payments and to cover large or unexpected expenses.

You can use your reverse mortgage to:

-Pay off an existing mortgage and eliminate debt
-Cover medical care, prescription drugs and in-home care
-Supplement your retirement income
-Make home improvements and repairs
-Modify your home for better accessibility
-Travel to visit family and friends
-Contribute to your grandchildren’s college education
-Purchase a new home with only a down payment

How do I qualify for a Reverse Mortgage?

To qualify for a reverse mortgage:

You and all other borrowers (maximum of three) must be the titleholder(s) of the property;

You and all other borrowers must be age 62 or older;

Your existing mortgage balance must be paid off at closing. You can choose to pay off the balance with funds from the reverse mortgage or another source;

and Your home must be an eligible property type.

What’s an eligible property type?

1) Single family home
2) Multi-family home (one unit must be your primary residence)
3) Condominium
4) Planned unit development
5) Modular home
6) Manufactured home (available only with Home Equity Conversion Mortgage)

Located in an eligible state (Senior Equity Reverse Mortgage products are not offered in all states). Ineligible properties include a cooperative (co-op) or mobile home.