Reverse Mortgage Flexible About Prepay
It doesn't really go with the territory but quite a few seniors get in touch with me and ask if they can pay the mortgage company monthly.
I know everyone has good intentions and you've heard about the best laid plans.
The question I have to ask is where is the money going to come from to make those payments. After all, reverse mortgage customers generally get reverse mortgages because they lack dollars. There is typically no reason this will change.
But the fact is some will make occasional payments. So, I always get the question of stipulations regarding making payments on the mortgage.
FHA sets the rules for reverse mortgage lending. FHA is clearly borrower favorable in that you can make payments at any time with out monetary repercussion.
One strong reason people wish to make payments is to reduce their tax burden. Remember, you get to write off interest on a reverse mortgage just as you would with a typical forward mortgage.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
You gotta make mortgage payments to get the write-off. This in itsef is an enticing reason for a customer to at least ask the question.
Keep in mind the tax laws. Most people roll closing costs into the loan when they initially get a reverse mortgage. Last time I checked the tax laws said closing costs needed to get paid prior to being able to make payments on the mortgage for the sake of writing off interest.
So, there is an order to that which parts of the mortgage can get paid.
One big expense when paying closing costs is the origination fee. That can easily be up to two percent of your appraised value when you first obtained your loan.
At least you have the lender's fee as a write-off while paying off closing cost prior to getting the interest write-off. Please check with your CPA on all tax related matters.
I know everyone has good intentions and you've heard about the best laid plans.
The question I have to ask is where is the money going to come from to make those payments. After all, reverse mortgage customers generally get reverse mortgages because they lack dollars. There is typically no reason this will change.
But the fact is some will make occasional payments. So, I always get the question of stipulations regarding making payments on the mortgage.
FHA sets the rules for reverse mortgage lending. FHA is clearly borrower favorable in that you can make payments at any time with out monetary repercussion.
One strong reason people wish to make payments is to reduce their tax burden. Remember, you get to write off interest on a reverse mortgage just as you would with a typical forward mortgage.
What is different about the reverse mortgage in comparison to the forward mortgage is you don't make periodic interest payments, so most reverse mortgage customers don't get that particular write-off until the very end of the mortgage.
You gotta make mortgage payments to get the write-off. This in itsef is an enticing reason for a customer to at least ask the question.
Keep in mind the tax laws. Most people roll closing costs into the loan when they initially get a reverse mortgage. Last time I checked the tax laws said closing costs needed to get paid prior to being able to make payments on the mortgage for the sake of writing off interest.
So, there is an order to that which parts of the mortgage can get paid.
One big expense when paying closing costs is the origination fee. That can easily be up to two percent of your appraised value when you first obtained your loan.
At least you have the lender's fee as a write-off while paying off closing cost prior to getting the interest write-off. Please check with your CPA on all tax related matters.
posted by Debt Consolidation Loan at
7:06 AM
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