Reverse mortgages are becoming increasingly popular with aging adults who have equity in their homes. Beyond just providing a means for supplemental income, a reverse mortgage has quite a few benefits your elderly loved one may want to consider.
It Can Make Aging in Place Easier
A reverse mortgage does not transfer ownership of the property to the lender. Your loved one retains the title to the home and can remain there as long as he or she wishes. Your loved one also does not have to worry about monthly payments on the reverse mortgage while he or she lives in the home. The loan does not become due until your loved one sells the home, moves to another primary residence for at least 12 consecutive months, or passes away.
It Can Be Used to Pay for Other Important Costs
Proceeds from a reverse mortgage can be used for any type of financial need. Your loved one can use the money to cover unexpected home repairs, medical expenses, long-term elder care in Naples, or to pay down other debts. Your loved one can also choose a disbursement plan that best suits his or her needs. He or she can elect to have the funds paid in one lump sum, as a line of credit, or in monthly payments.
The Fees Do Not Have to Be Paid Upfront
Traditional loans require certain costs and fees to be paid at the beginning of the loan. With a reverse mortgage, these fees can be folded into the loan, which means your loved one does not have to come up with the funds right away. However, interest will accrue on these fees when they are rolled into the loan, which can add up over time. The fees and interest associated with a reverse mortgage may also be higher than with a traditional loan, so your loved one should consider all of these factors in determining if a reverse mortgage is right for him or her.
The Funds Are Not Taxable
The funds from a reverse mortgage are not considered income and are not subject to tax. However, it is important to remember interest on reverse mortgages is compounded. This means your loved one cannot deduct the interest on his or her taxes until it is repaid.
Interested in learning more about senior finances and planning for the future? Reach out to Home Care Assistance. We offer flexible hourly and live-in care to make the activities of daily living easier for the elderly. We also offer specialized stroke, Alzheimer’s, and Parkinson’s care for Naples seniors who need more extensive assistance. For more information and to schedule a complimentary in-home consultation, call one of our Client Care Managers at (239) 449-4701 today.