With a reverse mortgage loan (also referred to as a a home equity conversion loan), borrowers of a certain age may use home equity for anything they need without selling their homes. The lender pays out funds determined by your home equity amount; you get a one-time amount, a payment each month or a line of credit. The borrowed money does not have to be repaid until the borrower sells the residence, moves away, or passes away. When you sell your home or you no longer use it as your main residence, you (or your estate) must pay back the lending institution for the cash you obtained from the reverse mortgage in addition to interest among other fees.
Generally, reverse mortgages require youto be at least sixty-two years old, have a small or zero balance owed against the home and use the home as your main residence.
Reverse mortgages can be appropriate for retired homeowners or those who are no longer working and have a need to add to their income. Interest rates may be fixed or adjustable while the money is nontaxable and doesn't interfere with Medicare or Social Security benefits. The lending institution is not able to take the property away if you live past the loan term nor may you be obligated to sell your residence to repay the loan even when the loan balance is determined to exceed current property value. If you'd like to find out more about reverse mortgages, please call us at (650) 689-5684.
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