In a reverse mortgage (also called a home equity conversion loan), homeowners of a certain age may use home equity for living expenses without selling their homes. The lending institution pays you funds determined by your home equity amount; you get a lump sum, a monthly payment or a line of credit. The borrowed money does not have to be paid back until the homeowner sells the home, moves away, or passes away. At the time your house sells or you no longer use it as your primary residence, you (or your estate) have to pay back the lender for the funds you received from the reverse mortgage plus interest and other finance charges.
The conditions of a reverse mortgage normally include being 62 or older, using the property as your main residence, and having a low remaining mortgage balance or having paid it off.
Homeowners who are on a limited income and need additional money find reverse mortgages ideal for their situation. Rates of interest can be fixed or adjustable while the money is nontaxable and does not interfere with Social Security or Medicare benefits. Your lending institution is not able to take the property away if you live past the loan term nor will you be required to sell your home to pay off your loan even when the balance is determined to exceed current property value. Contact us at (818)645-7035 if you'd like to explore the benefits of reverse mortgages.
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