Forgotten Your Password?

Need to Register?

Question Icon

If I make a payment on a reverse mortgage is payment applied to the interest that has accrued and can I deduct off my taxes?

by cenorton688 from Durham, North Carolina. Feb 29th 2016 Reply


The extra payment would be applied to the principal balancebalance and reduce the amount of the deduction bythe amount of interest that payment would have generated. Generally you would not make a payment to a reverse mortgage unless you wanted to finally pay the balance and keep the property.

Feb 29th 2016
2
0
Larry Gray (lgray_312_247)
#566 ranked lender in California - 1,127 contributions

It sounds like you would benefit from seeking the advise of an accountant or certified financial advisor. You could then consult with a Mortgage Planner as to your best course of action regarding remaining with the reverse mortgage, or perhaps explore converting back to a standard loan, should income be sufficientto do so.

Feb 29th 2016
1
0
Justin Murray (JustinMurray)
#102 ranked lender in Illinois - 172 contributions

What is the reason you would want to make a payment on a reverse mortgage?

Feb 29th 2016
1
0
William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,933 contributions

The payment would go towards the principal, but understand that the added interest is technically new principal at the end of the month when the lender does the accounting.. In other words, if you don't make a payment, then the unpaid interest is added to your principal balance. Also understand that you will get a 1098-T from your lender and you will be able to write off the interest paid, however IRS rules look at RM's as a Home Equity Line of Credit, and under the rules for HELOC's, you can only write off the interest on the first $100K. Check with your accountant and they would be able to go into more detail... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Mar 1st 2016
1
0
Sara Deere (SARAinMO)
#1 ranked lender in Kansas - 504 contributions

If you make any payments on a reverse mortgage, the payment is applied to the amount of interest and mortgage insurance premium that has accumulated. If you are making a payment that is over the amount of those two items, then the extra money gets applied to the original loan amount. Unlike a forward mortgage, you are not able to tell the servicer of the loan to apply any payment to the overall balance. It also depends on if you have a program that is based on a annual interest rate or monthly interest rate. The customer service department of the servicer, the company that sends you a statement, would be the best place to start. If you still have questions, I work for a company which has loan officers in your state, or try to reach out to your original loan officer.

Mar 1st 2016
0
0
Jesse Stroup (jessestroup)
#199 ranked lender in California - 591 contributions

It will be applied to the balance

Mar 7th 2016
0
0
Subscribe to our news feed.