In a reverse mortgage (sometimes referred to as a a home equity conversion loan), homeowners of a certain age may use home equity for anything they need without selling their homes. The lending institution gives you money determined by the equity you've built-up in your home; you receive a one-time amount, a payment each month or a line of credit. The loan doesn't have to be paid back until the borrower sells his residence, moves away, or dies. At the time your home sells or is no longer used as your main residence, you (or your estate) must repay the lending institution for the money you got from your reverse mortgage in addition to interest and other finance charges.
The conditions of a reverse mortgage normally include being 62 or older, using the home as your primary living place, and having a low remaining mortgage balance or having paid it off.
Reverse mortgages can be advantageous for retired homeowners or those who are no longer bringing home a paycheck and must supplement their limited income. Rates of interest may be fixed or adjustable and the funds are nontaxable and do not interfere with Medicare or Social Security benefits. The lending institution can't take the property away if you outlive your loan nor may you be required to sell your home to repay your loan amount even if the loan balance is determined to exceed current property value. Call us at 407-834-3377 if you want to explore the benefits of reverse mortgages.
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