With a reverse mortgage (also referred to as a home equity conversion loan), borrowers of a certain age may use home equity for living expenses without having to sell their homes. Deciding how you’d prefer to to receive your money: by a monthly amount, a line of credit, or a lump sum, you can get a loan based on your equity. The loan doesn’t have to be paid back until the homeowner sells the residence, moves away, or passes away. After your house has been sold or you no longer use it as your main residence, you (or your estate) are obligated to pay back the lending institution for the funds you got from the reverse mortgage plus interest among other fees.
Who is Eligible?
Most reverse mortgages require you to be at least sixty-two years old, have a low or zero balance in a mortgage and maintain the home as your main residence.
Many homeowners who are on a limited income and have a need for additional money find reverse mortgages advantageous 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. The lending institution can’t take the property away if you outlive your loan nor may you be obligated to sell your residence to repay your loan amount even if the balance is determined to exceed property value