Can A Reverse Mortgage Affect Your Medicare and Social Security Benefits?

A recent survey conducted by the American Institute of CPAs revealed that one of the greatest fears of U.S. retirees is running out of money. However, homeowners who are at least 62 years old have equity in their home and they can use that as a tool to quell their anxiety. A reverse mortgage will let them tap into that equity by providing them the funds they need to calm them down and save them from financial troubles.

However, can the proceeds from a reverse mortgage loan affect the Medicare and Social Security benefits?

The Basics of Reverse Mortgage

Reverse mortgages, also known as home equity conversion mortgages or HECM were developed back in 1980 as a product that would help seniors to remain solvent while staying in their houses.

With a regular mortgage, you are required to pay the bank every month until you’ve paid off your loan in full. With a reverse mortgage, it works the other way around since the bank will be making payments towards you. You will be withdrawing cash against your home equity and the loan won’t come due until you decide to sell or move out of your home or if you die.

How much you will receive will be based on a certain formula that will consider your home equity, your age, home value, as well as the interest rate that you will be paying. You have the option to take the mortgage as a line of credit, monthly payment, or lump sum.

There are some significant disadvantages to this kind of loan. It generally carries higher fees like closing costs, origination fees, as well as mortgage insurance premiums. All of these can be included into the loan and that means you will have to pay less or you won’t have to spend any from your pocket at the start. However, this will be added to the amount that the bank is expected to receive once the loan comes due or is terminated.

Why Take Out A Reverse Mortgage?

These kinds of lending instruments are not right for everybody. First, if you are hoping to leave your house to your estates, a reverse mortgage Charleston may not be the best option for you. In case your family plans to keep the home then they can do this by settling the balance of your loan once you die or move out. However, you need to know that this could be quite expensive. Additionally, if you are expecting your heir to sell the house, the proceeds they will get won’t be as much as they expect.

Secondly, in case you are struggling to cover your daily costs of running your home, a reverse mortgage loan might not be a good idea. If you fail to take care of the home maintenance costs and taxes, the bank has the right to call the loan. However, if you are just looking to find another source of income during retirement so you’ll have peace of mind, then this is a sensible financial planning tool that is worth considering. Plus, it does not affect your Medicare and Social Security benefits.

Call Reverse Mortgage Specialist if you need more information about this type of loan.

Reverse Mortgage Specialist
Charleston, SC 29401
843-353-6071
http://reversemortgagecharlestonsc.com/