“If you enter into a valid loan agreement, the value of the cash or item you receive is not income and does not reduce your SSI benefit. However, any funds that you borrow which you do not spend in that month will count toward your SSIresource limit of $2,000 for an individual (or $3,000 for a couple) the next month.”
In my opinion, and from casual conversations with personell at Social Security and in the reverse mortgage industry, as long as you spend the loan proceeds in the month you receive them, the funds will not be counted as a resource.
I always recommend that the homeowner consult with their SSI representative at Social Security and I would caution the homeowner to only take their reverse mortgage proceeds in the form of a line of credit, monthly tenure payments, or small term payments - and to be sure that they will spend those funds in the month they are received. I also give my clients a copy of this booklet about SSI and print out the linked webpage here, for them to show to their SSI representative.
It would make perfect sense for an older homeowner on SSI to use a reverse mortgage line of credit to access funds twice a year to pay for the property taxes and once a year to pay for the homeowners insurance and occasionally for the large unexpected expenses that come up. Regular maintenace items and home improvements geared toward helping seniors to “Age In Place” would be prudent expenses to pay for with a HECM Line of Credit.
By Deborah Nance
Your Local Southern California Reverse Mortgage Professional
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iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin.
Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.