A reverse mortgage is a special kind of home loan that is designed to let homeowners who are at least 62 years old to access a part of their home’s equity. It’s referred to as a reverse mortgage because the lender pays the borrower, instead of the other way around. These payments could be a line of credit, a monthly advance, or a lump sum. It could even be a combination of both.
Understanding Reverse Mortgages
Reverse mortgages come in three types. The first one is the single purpose reverse mortgage which is offered by some local and state government agencies as well as non profit firms. The second one is the federally insured reverse mortgage, which is also referred to as Home Equity Conversion Mortgages or HECMs. This type of loan is backed by the US HUD or the United States Department of Housing and Urban Development. The third one is the proprietary reverse mortgage. They are also referred to as private loans that are backed by the firms that created them.
If you take out a reverse mortgage, your home’s title will stay with you and you will continue to stay in your house. You should continue paying the property taxes, property insurance, and home repairs. If you decide to sell the house, move out, or die, you or your estate will be obliged to pay the loan.
The loan balance includes the amount that was paid to you, the interest rates, and the fees that were added to the loan balance every month. This simply means that the total amount you owe increases once the loan funds have been paid to you and the loan’s interest rate accrues. Generally, if the loan becomes due, you and your estate need to sell the house and use the money to pay off your debt. You and your estate could keep the money that’s left after paying off the loan. In case you or your heirs want to keep the house, you must repay the reverse mortgage loan in full and that means repaying the amount if even if it is greater than your home’s value.
Reverse Mortgage And Its Tax Issues
When it comes to taxes, there are advantages and disadvantages to Myrtle Beach reverse mortgage. On the other hand, reverse mortgage loans are loan advances and not income, which you earn. Therefore, the payments that you will get are not taxable. Additionally, they do not have any effect on your Medicare or Social Security benefits.
But, there’s a catch. All of the interest rates that piles up on your reverse mortgage loan isn’t deductible by you up until you pay for it, which is once you pay off the reverse mortgage loan in full. Apart from that, the mortgage interest deduction is generally subject to the exact same restrictions as other home equity loans and that is, you could deduct the interest on a long of $100,000 at most.
Call Reverse Mortgage Specialist if you wish to know more about reverse mortgages.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577