In a reverse mortgage (sometimes called a home equity conversion loan), homeowners of a certain age may use home equity for living expenses without having to sell their homes. Choosing between a monthly amount, a line of credit, or a lump sum, you may get a loan amount determined by your home equity. The borrowed money doesn't have to be repaid until the borrower sells the home, moves away, or dies. When your house sells or you no longer use it as your main residence, you (or your estate) must pay back the lending institution for the cash you received from the reverse mortgage as well as interest among other fees.
The conditions of a reverse mortgage typically include being 62 or older, maintaining the house as your main residence, and holding a small balance on your mortgage or owning your home outright.
Reverse mortgages are advantageous for retired homeowners or those who are no longer bringing home a paycheck and have a need to add to their fixed income. Rates of interest can be fixed or adjustable while the money is nontaxable and does not affect Social Security or Medicare benefits. Your lending institution cannot take the property away if you outlive your loan nor can you be forced to sell your home to pay off the loan even if the balance is determined to exceed current property value. If you would like to find out more about reverse mortgages, please contact us at (203) 526-9345.
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