Seniors with Disabilities and a Reverse Mortgage
Information
accurate as of
July 10, 2020
in Blog

Seniors with Disabilities and a Reverse Mortgage

Seniors with Disabilities and a Reverse Mortgage

Many seniors may wonder if a reverse mortgage is right for them.  But what if they have a disability and are on a limited income?  They may be concerned that the additional funds from a reverse mortgage could interrupt the benefits they are receiving from the federal government.  With a little bit of research and consulting with their financial advisor, they may find that a reverse mortgage can work for them.

Reverse Mortgages and SSI

A reverse mortgage can be a great option for anyone who is challenged in being able to take care of their current needs.  In addition, it may also be a good resource for individuals who receive Supplemental Security Income (SSI) because the reverse mortgage payments are not income and do not reduce SSI benefits.1

The reason why: With a reverse mortgage you are borrowing money and incurring a debt that must be repaid when you no longer continue to live in the home. Because this is a loan and the money must be repaid, the money received is a genuine loan and is not considered income for SSI benefit calculation. Furthermore, a debt is not a resource and the home you live in does not lose its excluded status when your resources are added together.  It is important to keep in mind, that if you save the reverse mortgage payments and have the money on hand in the month after it is received, it does count toward the SSI resource limits in those following months.1 As always, we suggest speaking with a Financial Advisor before making any changes to your retirement plan.

Requirements of a Reverse Mortgage

A Home Equity Conversion Mortgage, (HECM), commonly known as a reverse mortgage loan, is a Federal Housing Administration (FHA) insured loan2 which allows you to access a portion of your home’s equity without having to make monthly mortgage payments.2  If you are at least 62 years old and have sufficient equity in your home, you may be able to get the cash you need.

One benefit of a HECM is there are no monthly mortgage payments.3 If you still have a mortgage on your home, it must be paid off using the proceeds from your HECM loan. If you don’t have a current mortgage, it increases the amount of money you may be eligible to receive.  You also need to continue to reside in the home as your primary residence and continue to pay the required property taxes and homeowner’s insurance and maintain the home according to FHA requirements.

Speak to a Professional

If you are interested in learning more about a reverse mortgage and if it’s the right choice for you, call (800) 976-6211 to speak with a licensed reverse mortgage specialist.

1 https://www.benefits.com/ssi/ssi-calculate-income

2 As required by the Federal Housing Administration (FHA), you will be charged an up-front mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance.

3 Your current mortgage, if any, must be paid off using the proceeds from your HECM loan. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.