Reverse mortgages (sometimes called "home equity conversion loans") give older homeowners the ability to benefit from their built-up equity without selling their home. The lender pays you funds based on the equity you've built-up in your home; you get a one-time amount, a payment every month or a line of credit. Repayment isn't necessary until when the homeowner sells the property, moves (such as to a care facility) or dies. You or your estate representative must repay the reverse mortgage funds, interest accrued, and finance charges when your home is sold, or you can no longer use it as your primary residence.
The conditions of a reverse mortgage loan generally include being 62 or older, using the home as your main residence, and having a low balance on your mortgage or having paid it off.
Reverse mortgages can be great for homeowners who are retired or no longer working but need to add to their limited income. Rates of interest can be fixed or adjustable while the money is nontaxable and does not affect Medicare or Social Security benefits. The house is never in danger of being taken away from you by the lending institution or put up for sale against your will if you live longer than the loan term - even if the property value goes below the loan balance. If you'd like to learn more about reverse mortgages, feel free to contact us at (703) 551-4107.