Reverse mortgages (sometimes called "home equity conversion loans") give older homeowners the ability to benefit from their equity without selling their home. The lender pays out money determined by the equity you've accrued in your home; you receive a lump sum, a payment each month or a line of credit. Paying back your loan isn't necessary until when the homeowner sells the home, moves (such as to a retirement community) or dies. When you sell your property 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 finance charges.
Generally, reverse mortgages are appropriate for borrowers who are at least 62 years old, have a small or zero balance owed against the home and use the home as your principal residence.
Many homeowners who live on a limited income and have a need for additional funds find reverse mortgages advantageous for their situation. Interest rates may be fixed or adjustable and the funds are nontaxable and don't adversely affect Medicare or Social Security benefits. Your lender is not able to take the property away if you outlive your loan nor will you be made to sell your home to pay off your loan even if the balance is determined to exceed current property value. If you would like to learn more about reverse mortgages, please call us at (650) 689-5684.
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