Reverse mortgages (sometimes called "home equity conversion loans") enable older homeowners to use their built-up equity without having to sell their home. The lending institution gives you money based on your home equity amount; you receive a one-time amount, a monthly payment or a line of credit. The borrowed money doesn't have to be paid back until the borrower sells the residence, moves out, or dies. You or representative of your estate has to pay back the reverse mortgage loan, interest accrued, and finance charges at the time your home is sold, or you can no longer call it your primary residence.
Generally, reverse mortgages are offered to borrowers at least sixty-two years of age, have a low or zero balance in a mortgage and maintain the property as your main residence.
Reverse mortgages are great for homeowners who are retired or no longer bringing home a paycheck but have a need to add to their 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 away your home if you outlive your loan nor will you be required to sell your residence to repay your loan amount even when the loan balance is determined to exceed property value. Call us at (805) 496-7500 if you'd like to explore the advantages of reverse mortgages.