While reverse mortgages have been a gift for many seniors, the increase in income can adversely affect some the eligibility for many seniors looking to qualify for government assistance. This only make sense right? If your eligibility for Medicare was high with modest income, it should inversely shrink with the rise in income from a reverse mortgage.
For example, reverse mortgages may have tax consequences, affect eligibility for assistance under federal and state programs, and have an impact on the estate and heirs of the homeowner.
Getting additional income for daily living out of the home that’s paid for may sound great, but it’s important to understand what you are doing and how it affects your financial situation. If you consider reverse mortgage an option to explore, seek help for an unbiased opinion of the consequences both the pros and the cons. There are trained Home Equity Conversion Mortgage counselors (HECM) available to help. Throughout the country, many of them work for community action agencies.
Always consult a financial planner, tax consultant or personal attorney before considering a reverse mortage. The $500 or so fee a professional may charge could save you hundreds of thousands down the road. And if you can not afford to pay for a professional, consider consulting local community assitance programs funded by the governemnt or non profit industries.