In a reverse mortgage (sometimes 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 money determined by your home equity amount; you receive a lump sum, a monthly payment or a line of credit. The loan does not have to be paid back until the borrower sells the home, moves away, or passes away. When you sell your home or is no longer used as your main residence, you (or your estate) have to repay the lending institution for the money you got from your reverse mortgage plus interest among other fees.
The conditions of a reverse mortgage loan often include being 62 or older, using the property as your main residence, and having a small balance on your mortgage or having paid it off.
Homeowners who are on a limited income and find themselves needing additional funds find reverse mortgages helpful for their situation. Interest rates can be fixed or adjustable while the money is nontaxable and does not interfere with Social Security or Medicare benefits. Your lending institution cannot take away your residence if you outlive your loan nor will you be required to sell your home to repay the loan amount even when the loan balance grows to exceed property value. Contact us at (941) 954-4252 if you'd like to explore the advantages of reverse mortgages.