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 having to sell their homes. The lending institution pays out funds determined by the equity you've accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment isn't necessary until after the homeowner sells the property, moves (such as into a retirement community) or passes away. After your home sells or is no longer used as your primary residence, you (or your estate) have to pay back the lending institution for the money you got from your reverse mortgage as well as interest among other fees.
The requirements of a reverse mortgage loan often are being 62 or older, using the property as your primary living place, and holding a small remaining mortgage balance or owning your home outright.
Homeowners who live on a limited income and find themselves needing additional money find reverse mortgages helpful for their circumstance. Social Security and Medicare benefits aren't affected; and the money is not taxable. Reverse Mortgages can have adjustable or fixed rates. Your lending institution cannot take away your home if you live past the loan term nor can you be forced to sell your home to repay the loan amount even when the loan balance grows to exceed property value. If you'd like to find out more about reverse mortgages, feel free to call us at (800) 299-0270.