In a reverse mortgage (sometimes referred to as a a home equity conversion loan), homeowners of a certain age may use home equity for living expenses without having to sell their homes. The lending institution gives you money based on the equity you've accrued in your home; you get a lump sum, a payment every month or a line of credit. The borrowed money doesn't have to be paid back until the homeowner sells his residence, moves out, or passes away. After you sell your home or is no longer used as your primary residence, you (or your estate) are obligated to pay back the lending institution for the money you got from the reverse mortgage plus interest among other fees.
The conditions of a reverse mortgage loan usually include being 62 or older, maintaining the property as your primary residence, and holding a small balance on your mortgage or owning your home outright.
Many homeowners who live on a limited income and need additional money find reverse mortgages helpful for their circumstance. Rates of interest may be fixed or adjustable while the funds are nontaxable and do not adversely affect Medicare or Social Security benefits. Your home is never at risk of being taken away from you by the lender or put up for sale without your consent if you live longer than the loan term - even if the property value dips below the loan balance. If you'd like to learn more about reverse mortgages, feel free to call us at (773) 774-9040 Ext 121.