Reverse mortgages (sometimes called "home equity conversion loans") give older homeowners the ability to benefit from their equity without having to sell their home. The lender pays you money determined by the equity you've built-up in your home; you receive a lump sum, a monthly payment or a line of credit. The borrowed money doesn't have to be repaid until the borrower sells the home, moves away, or dies. At the time your house has been sold or is no longer used as your primary residence, you (or your estate) are obligated to repay the lending institution for the cash you received from your reverse mortgage as well as interest and other finance charges.
Most reverse mortgages are appropriate for homeowners at least sixty-two years old, have a low or zero balance owed against the home and use the home as your main residence.
Reverse mortgages can be great for homeowners who are retired or no longer working but need to add to their fixed income. Social Security and Medicare benefits won't be affected; and the money is not taxable. Reverse Mortgages can have adjustable or fixed rates. The lender will not take the property away if you live past the loan term nor may you be obligated to sell your home to pay off your loan amount even when the loan balance grows to exceed property value. If you would like to learn more about reverse mortgages, feel free to call us at 610-565-3600.