In a reverse mortgage loan (also 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 lender gives you money based on your home equity amount; you get a lump sum, a monthly payment or a line of credit. The borrowed money does not have to be repaid until the borrower sells the home, moves out, or passes away. When your home has been sold or you no longer use it as your main residence, you (or your estate) are required to repay the lender for the money you obtained from your reverse mortgage plus interest and other finance charges.
Generally, reverse mortgages require you be at least sixty-two years of age, have a small or zero balance in a mortgage and maintain the home as your main living place.
Reverse mortgages are advantageous for retired homeowners or those who are no longer working and need to supplement their fixed income. Social Security and Medicare benefits can not be affected; and the money is nontaxable. Reverse Mortgages can have adjustable or fixed rates. The lender will not take the property away if you live past the loan term nor may you be obligated to sell your residence to pay off the loan amount even if the loan balance grows to exceed current property value. Contact us at (805) 496-7500 if you'd like to explore the benefits of reverse mortgages.