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 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. Paying back your loan is not required until the time the homeowner puts his home up for sale, moves (such as into a care facility) or passes away. At the time your home has been sold or is no longer used as your main residence, you (or your estate) have to repay the lending institution for the money you received from your reverse mortgage as well as interest and other fees.
Generally, reverse mortgages require you be at least 62 years old, have a low or zero balance owed against your home and maintain the home as your principal residence.
Reverse mortgages are helpful for retired homeowners or those who are no longer bringing home a paycheck but have a need to supplement their limited income. Social Security and Medicare benefits are not affected; and the money is nontaxable. Reverse Mortgages can have adjustable or fixed rates. The house can never be at risk of being taken away by the lender or sold against your will 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 949-421-1000.