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Taxes and your Reverse Mortgage

Posted on March 20, 2014June 17, 2014 by janjordan

Spring has sprung in Northern Colorado again! That’s the good news. The bad news is this also means it’s tax time. It’s common during this time of year for me to receive a few questions regarding taxes and reverse mortgage – from both those considering a reverse mortgage, and those who already have a reverse mortgage.

Here are the two most common:

Are the funds from my reverse mortgage considered taxable income?

No. Because the funds received from a reverse mortgage are technically an advance on a loan, any payments or lump sums received are not taxable income, meaning they do not need to be reported on a tax return as such. They also typically do not affect Social Security or Medicare payments.

Is the interest from my loan deductible?

No. Because reverse mortgage holders do not make monthly mortgage payments and typically the interest is not paid until the loan is paid in full, the interest from a reverse mortgage loan is not deductible on a tax return. This is also the case with a reverse mortgage for purchase loan.

FHA insured reverse mortgages are available to homeowners 62 and older with no credit or income requirements. These loans allow the borrower to live mortgage payment free and receive their loan payment in one lump sum or in monthly installments. All borrowers are required to participate in third party counseling to ensure all their questions are adequately answered before making a decision. Reverse mortgages are also available to purchase a new residence.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado. Click here to contact Jan and learn if reverse mortgage is right for you.

3 Things to Do with a Reverse Mortgage in Colorado

Posted on March 10, 2014June 17, 2014 by janjordan

One of the best parts of a reverse mortgage is the borrower(s) can do anything they’d like with the funds – while also living mortgage payment free. In Colorado, seniors are more active than ever, whether it be traveling, home improvements, or visiting with family and grandchildren often. As several Colorado cities always make the list of the best cities to retire (including Fort Collins & Loveland in this survey and Firestone, Parker & Louisville in this one) there couldn’t be a better time or place to enjoy life.

Here are 3 fulfilling options seniors are using their reverse mortgage funds for:

Take that trip they always dreamed of – After years of working hard, saving for retirement, and raising a family, some reverse mortgage borrowers are using a portion of their funds to take the bucket list vacation they’ve always dreamed of. This option becomes less probable as they age and makes for a fantastic celebration by the more active seniors.

Visit with loved ones – Whether it’s a sister who hasn’t visited in 10 years, or children and grandchildren, or long lost friends, using reverse mortgage funds to visit with loved ones is a very common today. Travel can be expensive and it holds us back far too often from the visits that mean the most to us, especially as we age.

Make home repairs or upgrades – After a life of caring for others, senior homeowners often find parts of their home may have been neglected. When using a reverse mortgage to tap into home equity without a subsequent loan payment borrowers often make those repairs or upgrades they have been longing for. Whether it’s a sunroom addition or a kitchen remodel, or just dutiful repairs, this is never a bad option.

Reverse mortgages are available to homeowners 62 and over with no income and credit requirements. This FHA insured loan offers funds through a lump sum or monthly installments and eliminates monthly mortgage payments. With many protections in place to ensure borrowers are adequately educated before using this option, such as required third-party counseling, reverse mortgages are gaining in popularity among retirees from all walks of life. And a reverse mortgage for purchase option is available for those looking to purchase a new residence.

Strong Home Sales Highlight Reverse Mortgage for Purchase

Posted on February 5, 2014June 17, 2014 by janjordan

As existing home sales rose in December of 2013, the year ended with the strongest sales since 2006, as reported by Realtor.org report. This is great news according to Lawrence Yun, NAR chief economist, who said housing has experienced a strong and encouraging recovery over the past two years.

“Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market,” Yun said. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”

The national median existing-home price for all of 2013 was $197,100, which is 11.5 percent above the 2012 median of $176,800.

What does this mean for reverse mortgages? Well, it may mean it’s the perfect time to consider a reverse mortgage for purchase. Here’s how the program works:

For seniors 62 and over, with minimal credit and income requirements, home buyers are able to use reverse mortgage to purchase a new home. The amount of the down payment required from the buyer will depend on the amount of the home they are purchasing. But unlike a conventional loan, not only will the lender provide the funds to make up the difference between the home price and the down payment, the new home owners will also be able to live mortgage payment free for as long as they remain in the home.

There are two scenarios that may signal the time is right for you to consider a reverse mortgage for purchase. Such as:

Possibly you’re looking to sell your existing home and move to a community or house that better fits your needs? With the strength in the housing market and thinning inventory, this could be a great time to consider selling your current home. And with a reverse mortgage for purchase, there are options that allow you to purchase while the current home is still for sale.

And of course, if purchasing a new home is your only goal, jumping in as a buyer before the market becomes overly competitive and home prices rise, usually proves to be beneficial. And not only will the reverse mortgage supplement the existing proceeds when making the purchase, it can also mean the buyer will not need to drain all of their funds, freeing income up for other things – such as medical bills, in home care, or even vacations.

Jan Jordan is a Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, and Front Range areas of Colorado. Click here to contact Jan and learn if reverse mortgage is right for you.