Reverse mortgages allow the home owner to continue living in the home, and allows repayment of the loan to be deferred until the borrower is no longer living in the home.
In the United States, the proceeds of the reverse mortgage loan are tax-free, there are no minimum income or credit requirements, and for most reverse mortgages, the money can be used for any purpose.
Income and credit ratings are not considered by lenders when granting reverse mortgages, notwithstanding a bankruptcy that has not been resolved. The majority of reverse mortgages are FHA insured.
In a reverse mortgage in the U.S., a borrower can be paid in a lump sum, in monthly advances (payments, through a growing line of credit, or a combination of all three.
The reverse mortgage loan advances are not taxable and do not affect Social Security or Medicare benefits, although Medicaid and SSI benefits may be impacted.
The cost of a reverse mortgage exceeds the costs of other types of loans. However, in some cases the costs may be less than or the same as the cost of selling a home and moving.