Income Tax and Social Security Impact
The funds received through a reverse mortgage are not considered to be income, and are not subject to income tax. Social Security and Medicare benefits should not be affected, however borrowers are always to be encouraged to seek their own legal advice from advisors, attorneys, or SSI benefits specialists for guidance as it pertains to their own unique situation. Never give advice regarding taxes or welfare benefits.

Repayment
The loan is not due until the last remaining borrower either does not own or occupy the home as their principal residence or they default on the terms of the loan. A reverse mortgage is a non-recourse loan, meaning if the home is sold, the borrower or the estate will not owe more than the fair market value of the home at the time the loan is repaid.

A recent clarification from HUD has reiterated that it is a non recourse loan, but if the estate or borrower chooses to pay off or purchase the home, they will have to pay the full amount of the loan balance to do so. Any sales must be arm’s length transactions.

Borrowers may make repayments during the life of the loan without penalty. All payments go to principal

Partial prepayments are permitted at any time and the borrower will not be able to redraw the money that they prepay.