How Does The Money From a Reverse Mortgage Affect Medicare, Social Security, or Pension Benefits?

Learn how reverse mortgages affect other important benefits you may depend on.

Many senior citizens live on a fixed income. The idea of a reverse mortgage, a government sponsored plan in which seniors are paid a monthly sum as long as they continue to live in their homes, may be very attractive to these people, because it promises extra money each month as long as the senior continues to live in her home. However, the program would not be helpful if it interfered with the Social Security, Medicare, or pension plan benefits seniors already depend upon.

REVERSE MORTGAGES ARE SEPARATE FROM OTHER GOVERNMENT PROGRAMS

Reverse mortgages are government-sponsored programs, just as Social Security or Medicare. However, these programs are independent of each other. A reverse mortgage has no effect on Social Security, Medicare, or pension payments. Senior citizens can therefore use reverse mortgage funds to supplement their payments from other programs designed for people over the age of 62.

FUND LIMITATIONS

The only restriction on funds given through this program is that they may not be used to pay off an existing mortgage. Homeowners have to be mortgage-free in order to qualify for this program. However, if a mortgage is almost paid off, a reverse mortgage may still be granted, with the stipulation that the first month’s payment covers the remaining balance on the existing mortgage.

HOW REVERSE MORTGAGES AFFECT FINANCES

As long as the senior citizen continues to live in his home, the reverse mortgage is not any more of a debt than Social Security payments are. However, if the senior moves, the reverse mortgage immediately becomes payable. The longer the senior remains in the house, therefore, the higher the total debt. In the event that a senior dies while occupying the home, the heirs must pay off the debt. It is common to sell the house in order to accomplish this.

Related posts

1. Why Should I Invest in a Reverse Mortgage?
2. Can I Use the Funds Received From a Reverse Mortgage Any Way I Choose?
3. What are the Pros and Cons of a Reverse Mortgage?
4. Who Owns My House If I Have a Reverse Mortgage?
5. Are There Any Risks Of Taking Out A Reverse Mortgage?

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