Here are some of the main features of reverse mortgages:
- A borrower does not require an income to qualify for a reverse mortgage, and there is no verification of one’s credit history before approving the loan.
- The loan amount depends on the borrower’s age and the property value, as well as interest rates and the closing costs of home loans in the borrower’s neighborhood.
- There is no repayment required in reverse mortgages, as long as the borrower or any co-owner occupies the property.
- With a reverse mortgage, a borrower remains the owner of the property and is responsible for paying property taxes and homeowner insurance, and for conducting home repairs.
- The amount received in a reverse mortgage loan is not considered income by the Internal Revenue Service (loans are not income), and hence they don’t tax it; so, if you choose a monthly payment, you could look at your reverse mortgage cash as a kind of steady tax-free income (even though it is not technically income, in the eyes of the IRS).