In a reverse mortgage loan (sometimes referred to as a a home equity conversion loan), borrowers of a certain age may use home equity for anything they need without having to sell their homes. The lending institution gives you funds based on your home equity amount; you get a lump sum, a payment every month or a line of credit. The loan doesn't have to be paid back until the borrower sells his residence, moves out, or dies. When you sell your property or you no longer use it as your main residence, you (or your estate) are required to repay the lender for the money you obtained from the reverse mortgage plus interest among other fees.
Generally, reverse mortgages are offered to borrowers who are at least 62 years of age, have a small or zero balance in a mortgage and maintain the property as your main residence.
Reverse mortgages can be ideal for retired homeowners or those who are no longer working and must supplement their limited income. Social Security and Medicare benefits aren't affected; and the money is nontaxable. Reverse Mortgages can have adjustable or fixed rates. The residence is never in danger of being taken away by the lending institution or sold without your consent if you outlive the loan term - even if the current property value goes below the loan balance. If you'd like to learn more about reverse mortgages, please call us at 561-395-4264.