Reverse mortgages (also called home equity conversion loans or HECM) enable senior 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 can receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until you sell the property, moves into a retirement community or pass 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 loan plus interest and other finance charges to the lender.
Reverse mortgages require you be 62 years of age or better, have a low or zero balance owed against your home and maintain the property as your principal residence.
Reverse mortgages loans are ideal for homeowners who are retired or no longer working and need to supplement their income. Reverse mortgages are also used for estate planning purposes for more affluent seniors.
Interest rates can be fixed or adjustable and the payments are nontaxable and do 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.
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Reverse Mortgages
