Reverse mortgages (also referred to as "home equity conversion loans") enable older homeowners to tap into home equity without selling their home. Choosing between a monthly payment amount, a line of credit, or a lump sum, you may take out a loan amount determined by your home equity. Paying back your loan isn't necessary until the homeowner sells the home, moves (such as to a retirement community) or dies. When you sell your property or you no longer use it as your main residence, you (or your estate) have to pay back the lending institution for the cash you got from your reverse mortgage plus interest among other fees.
Generally, reverse mortgages require you be at least sixty-two years old, have a low or zero balance owed against the home and use the home as your principal living place.
Reverse mortgages can be appropriate for retired homeowners or those who are no longer bringing home a paycheck and have a need to add to their fixed income. Rates of interest may be fixed or adjustable and the funds are nontaxable and do not interfere with Social Security or Medicare benefits. Your lender will not take away your house if you outlive your loan nor can you be required to sell your home to repay the loan even when the loan balance is determined to exceed current property value. If you would like to learn more about reverse mortgages, please call us at 248-644-1200.
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