Lenders charge a number of fees to close on and maintain a reverse mortgage. While you don’t have to pay the majority of fees until you leave your home, you could receive less money overall than if you had sold the home outright.
Because a reverse mortgage is a loan, the lender will charge interest on the amount you take out. While you don’t have to pay interest as long as you’re living in the property, this reduces the amount you or your heirs would receive for selling your home.
No Annual Tax Deduction
The interest on a reverse mortgage is not tax deductible. Because you do not make payments on the interest while living in your home, it cannot be deducted every year but will instead accumulate on the mortgage balance. The interest will only be deductible when the reverse mortgage loan is paid off, either partially or fully.
If you live somewhere besides your home, you will eventually need to repay your reverse mortgage. Your loan is due if you live somewhere else for nonmedical reasons for a majority of the year. Additionally, if you move out for medical reasons, such as to assisted living facility, and are out of your home for more than 12 consecutive months, your loan must be repaid. This can force you to pay off the reverse mortgage earlier than expected.
Additional Housing Costs
While you don’t have to make loan payments on a reverse mortgage, you still need to cover other housing costs, including taxes, maintenance and housing association dues. If you fail to make these payments, the lender could foreclose on your home.
However, this concern is not unique to reverse mortgages. If you don’t pay your property taxes, you could eventually lose your home in any situation.
A reverse mortgage could reduce the inheritance for your heirs, as it reduces the equity in your home. If your heirs sell your home after your death, proceeds from the sale of the home will be used to pay off the loan, and then they will receive any remaining proceeds. If they want to keep your property, they will need to pay off the loan first. Usually, there is a 1 year grace period to determine the best options to refinance or sell the property. It’s all about the borrower choosing the best option for their situation and long-term assets plan. We often have clients that decide not to proceed with a reverse loan because they’re worried they won’t leave as much of an inheritance. We also counsel clients to think about discussing with their potential heirs before moving forward.
Start your secured online application.
We've been helping customers afford the home of their dreams for many years and we love what we do. Option to close electronically from the safety of your home, anytime, anywhere.
818 US Highway 202/206
Bridgewater, New Jersey 08807-1704
Call us today: 800-327-0123
Golden Mortgage Corporation strives to ensure that its services are accessible to people with disabilities. Golden Mortgage Corporation has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Golden Mortgage Corporation makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows www.goldmortgage.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Golden Mortgage Corporation accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Golden Mortgage Corporation continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Golden Mortgage Corporation website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Golden Mortgage Corporation website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: firstname.lastname@example.org