Reverse mortgages (also called "home equity conversion loans") give older homeowners the ability to use their home equity without the necessity of selling their home. The lender pays out money determined by the equity you've accrued in your home; you get a one-time amount, a monthly payment or a line of credit. The borrowed money does not have to be paid back until the borrower sells the home, moves out, or passes away. You or your estate representative must repay the reverse mortgage funds, interest accrued, and other finance charges after your property is sold, or you no longer live in it.
Generally, reverse mortgages are available for homeowners who are at least sixty-two years of age, have a low or zero balance owed against the home and maintain the house as your principal residence.
Homeowners who live on a fixed income and need additional funds find reverse mortgages advantageous for their circumstance. Rates of interest can be fixed or adjustable while the money is nontaxable and doesn't adversely affect Medicare or Social Security benefits. Your lending institution can't take away your residence if you outlive your loan nor can you be made to sell your home to pay off your loan even if the loan balance is determined to exceed current property value. If you'd like to find out more about reverse mortgages, feel free to contact us at (562) 693-5048.
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