In a reverse mortgage loan (sometimes 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 pays you funds determined by your home equity amount; you receive a lump sum, a payment each month or a line of credit. Paying back your loan is not necessary until the time the borrower puts his home up for sale, moves (such as into a care facility) or passes away. At the time your house sells or is no longer used as your main residence, you (or your estate) must pay back the lending institution for the funds you obtained from your reverse mortgage in addition to interest and other finance charges.
The conditions of a reverse mortgage often include being sixty-two or older, using the home as your main residence, and holding a small balance on your mortgage or having paid it off.
Reverse mortgages are appropriate for homeowners who are retired or no longer working but need to supplement their income. Interest rates may be fixed or adjustable and the money is nontaxable and doesn't adversely affect Social Security or Medicare benefits. The house is never at risk of being taken away from you by the lender or put up for sale without your consent if you live longer than your loan term - even if the current property value dips under the balance of the loan. If you would like to find out more about reverse mortgages, please call us at 866-300-1550.
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