Important Tax News If Considering a Reverse Mortgage

Seniors planning their finances during retirement need to be aware of a change from the Social Security Administration: full retirement age has been changed to 67 years old.  This is the first change to the retirement age since 1983, and it has some important implications to those at or near retirement.

It is possible to begin collecting Social Security benefits at age 62, but the benefits are reduced for each month a person receives benefits before the full retirement age of 67.  This can get a little confusing based on everyone’s unique situation and age, so I’d suggest reviewing this helpful chart to learn more:

How does this impact those thinking of a reverse mortgage?  Well, for starters it aligns the age requirements of a reverse mortgage (62 years old) to the earliest someone can begin collecting Social Security benefits.  Given that the benefits are reduced for each month a person begins collecting before age 67, it may make sense to consider other financial tools available like a reverse mortgage.

So if you are at or near 62 years old, and you have significant equity in your house, but need cash for things like: monthly expenses, home improvements, or just the ability to access cash via a line of credit, a reverse mortgage may be a good idea instead of beginning to collect reduced Social Security benefits.  

A reverse mortgage is a loan that uses the equity in the house as collateral.  Unlike a traditional “forward” mortgage, the bank pays the borrower with a reverse mortgage.  Borrowers can choose to receive this payment as a lump sum, fixed payments over time, a line of credit, or a mix of those three options.  For those that don’t plan to move, are at least 62 years old, and have significant equity in their home, this is an option that could provide the cash needed during retirement.

If you’re interested in learning more about this, please contact the team at Equity Access Group for more information.  You can also read more about reverse mortgages on this blog.