In a reverse mortgage (also referred to as a 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 gives you funds determined by your home equity amount; you receive a lump sum, a monthly payment or a line of credit. The loan doesn't have to be paid back until the homeowner sells the home, moves away, or passes away. You or your estate representative is required to pay back the reverse mortgage amount, interest accrued, and other finance charges after your house is sold, or you no longer live in it.
Most reverse mortgages require youto be at least sixty-two years of age, have a low or zero balance in a mortgage and maintain the house as your principal residence.
Reverse mortgages can be ideal for retired homeowners or those who are no longer working but have a need to add to their limited income. Interest rates can be fixed or adjustable and the funds are nontaxable and don't adversely affect Medicare or Social Security benefits. The home is never at risk of being taken away by the lending institution or sold without your consent if you live longer than the loan term - even if the current property value dips under the balance of the loan. If you'd like to learn more about reverse mortgages, please contact us at 562-818-3502.