Reverse mortgages
allow the home owner to continue living in the home, and allows
repayment of the loan to be deferred until the borrower is no longer
living in the home.
In the United States, the proceeds of
the reverse mortgage loan are tax-free, there are no minimum
income or credit requirements, and for most reverse mortgages,
the money can be used for any purpose.
Income and credit ratings are not considered by lenders when granting
reverse mortgages, notwithstanding a bankruptcy that has not been
resolved. The majority of reverse mortgages are FHA insured.
In a reverse mortgage in the U.S., a borrower can be paid in a lump sum,
in monthly advances (payments, through a growing line of credit, or a
combination of all three.
The reverse mortgage loan advances are not
taxable and do not affect Social Security or Medicare benefits,
although Medicaid and SSI benefits may be impacted.
The cost of a reverse mortgage exceeds
the costs of other types of loans. However, in some cases the costs may
be less than or the same as the cost of selling a home and moving.
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