In a reverse mortgage (also called a home equity conversion loan), borrowers of a certain age may use home equity for living expenses without selling their homes. The lending institution gives you funds based on your home equity amount; you receive a one-time amount, a payment every month or a line of credit. The borrowed money does not have to be paid back until the homeowner sells the residence, moves away, or passes away. At the time your house has been sold or is no longer used as your primary residence, you (or your estate) have to pay back the lender for the funds you received from the reverse mortgage as well as interest among other finance charges.
The requirements of a reverse mortgage loan usually include being 62 or older, maintaining the home as your primary residence, and holding a low remaining mortgage balance or having paid it off.
Reverse mortgages can be appropriate for homeowners who are retired or no longer working but have a need to supplement their limited income. Rates of interest can be fixed or adjustable while the money is nontaxable and doesn't adversely affect Medicare or Social Security benefits. Your lending institution will not take the property away if you outlive your loan nor will you be required to sell your home to repay the loan even when the balance is determined to exceed current property value. Contact us at 760-547-2080 to discuss your reverse mortgage options.