With a reverse mortgage (also called a home equity conversion loan), homeowners of a certain age may use home equity for anything they need without selling their homes. The lending institution pays out money determined by the equity you've built-up in your home; you receive a lump sum, a monthly payment or a line of credit. The loan doesn't have to be paid back until the borrower sells the home, moves away, or passes away. At the time your home has been sold or is no longer used as your main residence, you (or your estate) must pay back the lender for the money you got from your reverse mortgage plus interest among other fees.
The requirements of a reverse mortgage generally include being 62 or older, using the property as your primary residence, and having a small remaining mortgage balance or having paid it off.
Many homeowners who are on a limited income and find themselves needing additional funds find reverse mortgages ideal for their situation. Social Security and Medicare benefits aren't affected; and the funds are not taxable. Reverse Mortgages may have adjustable or fixed interest rates. The lender can't take away your home if you outlive your loan nor may you be made to sell your residence to pay off the loan even if the balance is determined to exceed current property value. If you would like to learn more about reverse mortgages, feel free to contact us at 561-395-4264.