How Can Homeowners Getting Supplemental Security Income (SSI) or Social Security Disability (SSDI) Increase Their Income?

By / March 20, 2017 / SSI Benefits / 11 Comments

Learn how disabled homeowners can increase cash flow without debt and still keep their SSDI and SSI disability benefits.

Whether receiving Social Security Disability (SSDI) or Supplemental Security Income (SSI), living on a fixed income can be difficult and the choices for a disabled person to increase income are limited. One of the few—and for some disabled homeowners— best options is a reverse mortgage.

What is a reverse mortgage?
If your home is paid for, some lending institutions—banks, credit unions, and mortgage companies—will purchase your home from you little by little while you continue to live in it. The way it works is that a bank, for example, will send you regular monthly payments while you retain full rights to live in your home. The amount of the payments depends on the value of the property, how long the reverse mortgage is set up for, and other factors you work out with the bank.

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A reverse mortgage puts a lien on your property that has to be paid, but not while you are living in your home. When you die or move out of your home, the property must be sold and the reverse mortgage payments paid back to the bank from the proceeds of the sale. (This is not a bank sale of your home; rather you or your heirs sell the home and the bank lien is satisfied when the sale of the house is finalized.)

Gradually, your equity in the property (portion of the value of your property that you own) goes down, but you still get to live in your home while you have additional income to meet your current needs and some of your desires.

A reverse mortgage can be a great option for any disabled or retired person who is challenged in being able to take care of their current needs, but it is an especially good resource for individuals who receive Supplemental Security Income (SSI) because the reverse mortgage payments do not reduce SSI benefits.

Here’s the reason: With a reverse mortgage you are borrowing money and incurring a debt that must be repaid when you no longer live in the home. Because the money must be repaid, the money received is a bona fide (true) loan and is not considered income for SSI benefit calculation. Additionally, a debt is not a resource and the home you live in does not lose its excluded status when your resources are counted up. (Do note, though, if you save the reverse mortgage payments and have the money on hand in months after it is received, it does count toward the SSI resource limits in those subsequent months.)

Of course, a reverse mortgage is not for everyone, but if you think it might be for you, Disability Advisor suggests that you shop around with various financial institutions to see what might work best for you and, of course, that you fully understand all papers you sign before entering into any agreement.

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How Can Homeowners Getting Supplemental Security Income (SSI) or Social Security Disability (SSDI) Increase Their Income?
4 (80%) 1 vote

  • Dear Michael,

    Please see my response to the comment your wrote just previous to this one. I still recommend that you consult with a real estate attorney. It might save you a lot of time and headache. I am not knowledgeable in arbitration or other dispute settlement, so I cannot comment on that.

    Sincerely,
    Kay

    • Michael Farar

      Hi Kay,
      thanks for all of your guidance and support. I’m just very
      upset the way my father, and grandmother who passed 14 months ago, were treated, and from what my father say’s was all the stress from this, and my grandmothers youngest son, who at the time, was the sole owner of the property, die from complications of what was supposed to be a routine hernia surgery. Since I came on scene, I have personally witnessed and been party to, their tight lipped, game playing, and refusal to communicate with us. One of the managers even told us, when I set up a meeting, with them, that she and the “estate unit dept” agree, after we faxed/submitted documents’ i.e. death certificates, power of attorney, county recorders docs, etc etc Now, they wont even simply tell us what the mortgage is???…We dont know if its 83K or $129K due to a possible loan modification. I have accessed the account and there’s only one loan with this particular lender…Is there a second loan, or loan mod with some other company??? We will soon find out. The broker has told us that if it is a loan mod we cannot do the reverse mortgage. Also, on a later meeting with the lender, the branch manager, would not tell us anything, even when we shared the county recorders document showing “joint tenants” so, our broker opened escrow on the property to get the true figures. I have read up on a whole lot of dirt on these people. I wish I could tell you who? but, at this point in time, not on a open forum. The house, and myself, is all that my father has. He wont probably make it another year, two, at most. He has paid the mortgage dutifully, every month and always on time.They have had this property since 2000. The lump sum we are seeking would truly serve a great purpose. That would be to share with him a life that does not include a simple and meager existence. He has gone “without” just so he could pay the mortgage. The more that I read up on this institution and the scandals they are associated with, yes! I believe its time to call a more than competent real estate attorney.

      Any suggestions, please feel free. Thanks again for all your input.

      Michael

      • Dear Michael,

        I have no suggestions other than consulting with a real estate attorney.

        Sincerely,
        Kay

  • Dear Michael,

    I suggest that you and your father consult with a real estate attorney to get clarity. If your father and your grandmother inherited the property and were recorded on a new warranty deed as joint tenants, it may not matter that the mortgage was not in their names. With your grandmother’s death, the property probably belongs to your father only, that is, until he gives you part ownership as you are now planning. In other words, your father may not have been harmed in any way.

    Sincerely,
    Kay

  • Dear Michael,

    Your SSDI will not be affected by ownership in the property or by living there or receiving a reverse mortgage payment.

    Your father’s situation is more complicated.

    I assume that your father has been reporting the rental income and it has been considered in the calculation of his SSI benefit. If you become a renter in the second unit, the situation will be the same as when he had a different renter. On the other hand, if you live in the same unit of the duplex as your father, his SSI will be reduced if you pay more than your share of shelter expenses (and of food if you share food). Shelter expenses are mortgage, property taxes, and property insurance if required by the lender.

    Reverse mortgage payments are converting an excluded resource to cash. The half of the reverse mortgage payments paid to him should not count as income in the month received. However, the first of the following month, any of that reverse mortgage payment that he still has will count toward his $2,000 resource limit.

    Sincerely,
    Kay

  • Dear Cindy,

    No one gets the $245 by which your SSI benefit is reduced. The benefit is reduced because you were receiving in-kind (non-cash) income in the form of free or subsidized shelter and/or food, apparently in the home you are living in.

    You can get an increase in SSI by either paying your share of shelter and food or of shelter and buying your own food or by paying fair market value (FMV) rent to the person in whose home you live.

    Your share is the total shelter expenses (and food expenses if you share food) divided by the number of people in the household regardless of age. Shelter expenses are shelter utilities (power, heat, water/sewer, and garbage) and rent or mortgage, property tax, and if required by the lender property insurance.

    Fair market value for food would reasonably be the maximum food stamp grant for one person, which is $194.00. FMV for room is the amount such rooms are renting for in your geographic area. Social Security law does not specify an amount required to be paying FMV because the economy is different in every location. You can figure out a fair market rental rate by looking at ads for room rentals in your area and/or by choosing your state and county on the federal HUD website at https://www.huduser.gov/portal/datasets/fmr/fmr_il_history/select_Geography.odn. The site will not list rooms, but it will list studio or efficiency (one-room) apartments. A room in a house would probably cost about half of that amount.

    Sincerely,
    Kay

  • Dear Karen,
    See previous answer.
    Sincerely,
    Jane

  • Dear Karen,
    Yes this is the maximum amount you can draw from Supplemental Security Income (SSI). If your mother doesn’t live with you, and is helping with the utilities, this could be counted as in-kind support (non cash income) and could reduce the amount of SSI you receive.
    Sincerely,
    Jane

  • Dear Victoria,
    Moving state to state will not affect Social Security Disability Benefits (SSDI).
    Sincerely,
    Jane

  • Dear Diane,

    You may be eligible for Supplemental Security Income (SSI) to supplement your Social Security benefit. I suggest that you call Social Security at 1-800-772-1213 to request an appointment to apply.

    Sincerely,
    Kay

  • Dear Lydia,

    Because you are co-owner, you cannot pay to your daughter. This means that for your federal SSI payment not to be reduced, you need to pay your share of shelter expenses as well as buying your own food. Your share is the total shelter expenses divided by the number of people in the household. Shelter expenses are shelter utilities (power, heat, water/sewer, and garbage) and mortgage, property tax, and if required by the lender property insurance. As far as a state SSI supplement goes, check with your New Orleans Social Security office when you report your move to find out whether Louisiana pays a supplement and, if so, whether you are eligible for it.

    Sincerely,
    Kay

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