A reverse mortgage does not count as income because it is essentially a loan that does not need to be repaid until the owners no longer live in the home.
Reverse Mortgage Advantages
A reverse mortgage entitles homeowners to receive a portion of their equity. Mortgage payments cease and equity payments are sent to the property owners in the form of monthly payments, a line of credit, or one lump sum. These equity payments are not considered income, and do not need to be reported as income on tax returns. The money falls under the category of a loan even though it is not expected to be repaid until the homeowners pass away, or no longer live at the residence.
Entering a Reverse Mortgage Loan
The reverse mortgage loan allows senior homeowners who are at least 62 years old, to earn extra income from the equity that has accumulated in their home. Increasing age is beneficial because it elicits a lower interest rate and a higher home value. In this case older is better, and there is no income, credit, or medical requirements to qualify for this type of mortgage agreement. The applicants are entitled to live in their home and receive equity payments until they desire to make a change in their living arrangements.
Reverse Mortgage Results
A reverse mortgage can result in the homeowners’ ability to eliminate an existing mortgage, pay outstanding medical bills or credit card debt, travel, or fund home renovations. The versatility of this loan is the true advantage that is drawing seniors to apply for this type of mortgage. With aging comes the additional expense of higher insurance premiums, medical co pays, and prescription drugs. Funds from a reverse mortgage allow seniors to relax and enjoy a well deserved retirement phase in their lives.
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