Reverse
mortgages (also called home equity conversion loans) enable elderly homeowners
to tap into their equity without selling their home. The lender pays you money
based on the equity you've accrued in your home; you receive a lump sum, a
monthly payment or a line of credit. Repayment is not necessary until the
borrower sells the property, moves into a retirement community or passes away.
When you sell your home or no longer use it as your primary residence, you or
your estate must repay the cash you received from the reverse mortgage plus
interest and other finance charges to the lender.
Most reverse mortgages require
you be at
least 62 years of age, have a low or zero balance owed against your home and
maintain the property as your principal residence.
Reverse
mortgages are ideal for homeowners who are retired or no longer working and need
to supplement their income. Interest rates can be fixed or adjustable and the
money is nontaxable and does not interfere with Social Security or Medicare
benefits. Your lender cannot take property away if you outlive your loan nor can
you be forced to sell your home to pay off your loan even if the loan balance
grows to exceed property value.
Reverse Mortgages
