subject: Can Reverse Mortgage Affect My Government Benefits? [print this page] A reverse mortgage enables older homeowners to convert part of the equity in their homes into tax-free cash without having to sell the home, give up title, or take on a new, monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is reversed. Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.
For anyone over the age of 62 and who has equity in their primary home, there is a possibility to release that equity and make yourself more financially comfortable without having to take on new monthly payments or move house. The amount available is normally calculated as a lump sum of money you can borrow against your home but you do not have to take the loan as a lump sum, there are other options.
You will still own your home and you can, if you choose to, live in it until you die or sell at any time if you decide your home is too big or is too much work or unkeep for you to cope with. This option is called a 'Reverse Mortgage', How a reverse mortgage works is that you take out a loan against your home but you do not make any repayment, instead any interest accrued is added to the loan amount year on year and is paid off either when you die, you sell the house or you leave the house and it is no longer your primary residence.
Thankfully, there seems to be very little confusion now that a reverse mortgage while insured indirectly by the government is itself NOT a government benefit. Many borrowers, however, dont understand how obtaining a reverse mortgage will affect their actual government benefits.
Fortunately, there seems to be very little impact on ones primary entitlement benefits ( like Social Security, disability and Medicare) when obtaining a reverse mortgage. With Social Security, the amount that you receive is generally proportional to the amount that you paid into the fund while you were working, so any additional income you receive after youve retired wont affect your entitlement. The same is generally true for Medicare; once you qualify, it doesnt really matter what your financial position is, from the standpoint of the government.
On the other hand, obtaining a reverse mortgage can definitely impact your eligibility for need-based programs, such as Medicaid, Food Stamps, etc. When computing these benefits, the government will take all of your income into account, including funds received from a reverse mortgage. However, if these funds are relatively modest, and if you typically spend your disbursement in the same month that you receive it, you may able to claim them as cost-of-living funds (as opposed to disposable income). In this case, you should still be eligible to receive those types of government funds.
For all of these benefits, you should consider that the government will probably have to make some tough decisions in the next couple decades in order to make sure that they remain functioning. That probably means that they will become more aggressive in determining who actually needs these funds, irrespective of who is entitled to them. Fortunately, this kind of scrutiny is still many years away, and for now, you can rest assured that obtaining a reverse mortgage probably wont affect your access to government benefits.
Now lets assess how much cash can you be paid? For FREE reverse mortgage information, give us a call. We will be more than happy to answer any questions that you may have. Or if youd like to find out how money you qualify for and if youre eligible, feel free to give us a call at (800)630-0650.
Tim Jacobs
Golden Years Mortgage Solutions
Your MoneyWhen You Need It
www.GoldenYearsMortgageSolutions.com
(800)630-0650
tim@goldenyearsmortgagesolutions.com
Tim Jacobs @ Golden Years Mortgage Solutions www.GoldenYearsMortgageSolutions.com (800)630-0650 tim@goldenyearsmortgagesolutions.com Golden Years Mortgage Solutions is a reverse mortgage approved FHA Lender. Weve helped thousands of senior homeowners solve their financial problems. Our agents and brokers collectively have over 60 years of experience in Reverse Mortgage Loans and general financial services, including managers who are industry pioneers with more than 12 years of reverse mortgage experience. Our dedication to providing financial solutions for seniors is evidenced by the number of referrals that come from our existing clients.
