With a reverse mortgage (also referred to as a a home equity conversion loan), homeowners of a certain age may use home equity for living expenses without selling their homes. The lending institution pays you funds determined by the equity you've built-up in your home; you get a lump sum, a monthly payment or a line of credit. The loan doesn't have to be paid back until the homeowner sells his home, moves away, or passes away. At the time you sell your home or you no longer use it as your main residence, you (or your estate) must pay back the lender for the money you received from your reverse mortgage plus interest and other fees.
Most reverse mortgages are offered to borrowers who are at least sixty-two years of age, have a low or zero balance owed against your home and maintain the home as your principal residence.
Reverse mortgages are ideal for homeowners who are retired or no longer working but must supplement their fixed income. Social Security and Medicare benefits aren't affected; and the funds are nontaxable. Reverse Mortgages may have adjustable or fixed interest rates. The home can never be in danger of being taken away from you by the lender or sold against your will if you live longer than your loan term - even if the current property value creeps below the loan balance. If you would like to learn more about reverse mortgages, feel free to call us at 561-395-4264.