With a reverse mortgage (also referred to as a a home equity conversion loan), borrowers of a certain age may use home equity for living expenses without having to sell their homes. The lending institution pays you money based on your home equity amount; you get a lump sum, a payment each month or a line of credit. Repayment is not necessary until the homeowner puts his home up for sale, moves (such as to a care facility) or dies. At the time your house has been sold or is no longer used as your primary residence, you (or your estate) must pay back the lender for the money you received from your reverse mortgage in addition to interest among other finance charges.
The conditions of a reverse mortgage typically are being sixty-two or older, maintaining the home as your primary residence, and holding a low remaining mortgage balance or having paid it off.
Homeowners who are on a limited income and find themselves needing additional money find reverse mortgages ideal for their situation. Interest rates may be fixed or adjustable while the money is nontaxable and doesn't adversely affect Social Security or Medicare benefits. Your lender cannot take the property away if you live past the loan term nor may you be required to sell your residence to pay off your loan even when the loan balance grows to exceed current property value. If you'd like to learn more about reverse mortgages, feel free to contact us at 760-547-2080.