Reverse mortgages (sometimes called "home equity conversion loans") enable older homeowners to use their equity without having to sell their home. The lending institution gives you funds determined by the equity you've built-up in your home; you get a one-time amount, a monthly payment or a line of credit. Repayment isn't required until the time the homeowner puts his home up for sale, moves (such as into a retirement community) or passes away. You or your estate representative has to repay the reverse mortgage funds, interest , and finance fees when your home is sold, or you are no longer living in it.
The conditions of a reverse mortgage loan normally are being 62 or older, using the property as your primary living place, and holding a small balance on your mortgage or owning your home outright.
Reverse mortgages are appropriate for retired homeowners or those who are no longer working and have a need to add to their fixed income. Rates of interest can be fixed or adjustable and the funds are nontaxable and do not adversely affect Social Security or Medicare benefits. Your lender will not take away your home if you outlive your loan nor will you be forced to sell your home to repay the loan even if the balance is determined to exceed property value. If you would like to learn more about reverse mortgages, feel free to contact us at (650) 689-5684.
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