Reverse mortgages (also referred to as "home equity conversion loans") give older homeowners the ability to use their built-up home equity without the necessity of selling their home. The lender pays you funds determined by your home equity amount; you get a one-time amount, a monthly payment or a line of credit. The loan doesn't have to be repaid until the homeowner sells his residence, moves out, or dies. When your house sells or you no longer use it as your primary residence, you (or your estate) must pay back the lending institution for the cash you received from the reverse mortgage in addition to interest and other fees.
The requirements of a reverse mortgage loan generally include being sixty-two or older, maintaining your property as your primary residence, and holding a small remaining mortgage balance or owning your home outright.
Many homeowners who live on a fixed income and need additional money find reverse mortgages advantageous for their circumstance. Social Security and Medicare benefits will not be affected; and the funds are not taxable. Reverse Mortgages can have adjustable or fixed rates. The home is never in danger of being taken away by the lending institution or put up for sale against your will if you live past your loan term - even if the current property value goes below the loan balance. If you would like to learn more about reverse mortgages, feel free to call us at (401) 583-4150.
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