Reverse mortgages (also called "home equity conversion loans") give older homeowners the ability to benefit from their home equity without having to sell their home. The lending institution gives you funds based on your home equity amount; you get a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the homeowner puts his home up for sale, moves (such as into a retirement community) or passes away. You or your estate representative has to pay back the reverse mortgage funds, interest accrued, and other finance charges at the time your home is sold, or you can no longer call it your primary residence.
Typically, reverse mortgages are appropriate for homeowners who are at least 62 years old, have a low or zero balance in a mortgage and use the house as your principal living place.
Homeowners who are on a limited income and have a need for additional money find reverse mortgages advantageous for their situation. Interest rates can be fixed or adjustable while the money is nontaxable and does not adversely affect Medicare or Social Security benefits. The lending institution is not able to take the property away if you outlive your loan nor will you be obligated to sell your home 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, please call us at 561-395-4264.