Can a reverse mortgage be taken out if there is already a conventional mortgage on the home?
Yes, but existing mortgages must be paid off at closing. The proceeds from the reverse mortgage may be used for that purpose. This eliminates a monthly mortgage payment. What about a home in a “living trust”? A homeowner who has put their home in a living trust can usually take out a reverse mortgage, subject to a review of the trust documents. Will I have any tax liability for the reverse mortgage proceeds? Currently the Internal Revenue Service treats monies received from a reverse mortgage to be loan advances and not taxable income. (Consult your tax advisor) How do the monies from a reverse mortgage affect Social Security and Medicare? The proceeds from a reverse mortgage generally do not affect these benefits. (Consult appropriate government agencies) Does the lender take the house? No, a reverse mortgage is merely a loan against the property. The title remains in the name of the borrower and the lender is only repaid the loan balance. What if I owe more than my home is worth? All
