Minnesota Refinance | MN Refinancing

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.

It makes almost no matter. People continue to ask if the lender will charge extra or allow these borrowers to make early payments.

The truth be known reverse mortgage lenders, and more particularly FHA, have no qualms with borrowers making payments of any kind prior to the end of the mortgage.

You may be asking why someone would want to make payments. Well, people have reasons from hating debt of any sort to using the mortgage as a tax shelter. This latter reason is one of the biggies.

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 have to make payments. This would be a good reason for someone to prepay the reverse mortgage.

Of course, when prepaying the mortgage one must consider the tax laws. They always cramp the average person’s style and this is no different. Since most people finance closing costs in a reverse mortgage these costs must be paid prior to getting any interest write-off.

So, there is an order to that which parts of the mortgage can get paid.

Of all the costs originally financed into your reverse mortgage one of the largest was the lender’s loan origination fee. This fee could have been two percent of the home’s value or even more.

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.