Reverse mortgages: Tax-free money you don't pay back while living in your home

Federal legislation has become law that allows homeowners age 62 and over to borrow from their home equity and not make any loan repayments as long as their home remains their primary residence. In essence they receive tax-free money they do not pay back while they live in their home. The reverse mo...

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Bibliographic Details
Published inJournal of financial service professionals Vol. 56; no. 5; p. 84
Main Author Hansen, Kenneth A
Format Journal Article
LanguageEnglish
Published Bryn Mawr Society of Financial Service Professionals 01.09.2002
Subjects
Age
Federal legislation
Financial institutions
Financial planning
Fixed incomes
Foreclosure
Home equity loans
Homeowners
Insurance coverage
Insurance premiums
Life expectancy
Medicare
Nonrecourse debt
Personal finance
Property & casualty insurance
Property taxes
Reverse mortgages
Tax free
United States > US
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Summary:Federal legislation has become law that allows homeowners age 62 and over to borrow from their home equity and not make any loan repayments as long as their home remains their primary residence. In essence they receive tax-free money they do not pay back while they live in their home. The reverse mortgage is considered a nonrecourse debt, which allows only the proceeds from the sale of their residence to pay off the loan. The homeowners, their heirs and their estate are not liable for any loan deficiencies. A study shows how to maximize benefits that cash out home equity values without fear of being displaced by a mortgage foreclosure. A retired homeowner should consider setting up a line of credit under the Home Equity Conversion Mortgage plan, even before monthly payments are necessary, because there is a statutory limit on the aggregate number of reverse mortgages available.
ISSN:1537-1816
2381-8875