With a reverse mortgage (also referred to as a a home equity conversion loan), borrowers of a certain age may use home equity for living expenses without having to sell their homes. The lending institution gives you funds determined by your home equity amount; you get a lump sum, a monthly payment or a line of credit. The loan doesn't have to be paid back until the borrower sells his home, moves away, or dies. When your house sells or is no longer used as your primary residence, you (or your estate) must repay the lending institution for the money you got from your reverse mortgage plus interest and other finance charges.
The conditions of a reverse mortgage normally include being sixty-two or older, maintaining the property as your primary living place, and having a small remaining mortgage balance or having paid it off.
Homeowners who live on a limited income and have a need for additional money find reverse mortgages ideal for their circumstance. Rates of interest can be fixed or adjustable and the funds are nontaxable and do not interfere with Medicare or Social Security benefits. The lender can't take away your house if you live past the loan term nor may you be required to sell your residence to repay the loan amount even when the balance is determined to exceed current property value. If you would like to learn more about reverse mortgages, please contact us at 949-421-1000.