Reverse Mortgage| The Facts
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What is a Reverse Mortgage?
A Reverse Mortgage (also called a Home Equity Conversion Loan), allows approved borrowers of a certain age to use home equity for living expenses without having to sell their homes.
Once you decide how you'd like to receive the funds: via a monthly amount, a line of credit, or a lump sum - you can determine the loan amount, which is based on home equity. Paying back the loan isn't required until after the borrower puts the home up for sale, moves (such as into a care facility) or passes away. You or an estate representative then pay back the reverse mortgage amount, interest, and any other finance fees after the home is sold.
Who can Participate?
Typically, Reverse Mortgages require you to be at least 62 years old, have a low or zero balance in a mortgage, and use the home as your principal residence. You're also required to stay current on all property taxes/insurance, and keep the home maintained.
Homeowners who live on a fixed income and have a need for additional money may find Reverse Mortgages advantageous for their circumstance. Interest rates may be fixed or adjustable and the funds are nontaxable and don't interfere with Medicare or Social Security benefits. The lender also can't take the property away if you live past the loan term, nor may you be forced to sell your home to repay your loan even if the balance grows to exceed current property value.
Please Note: This material is not from HUD or FHA and has not been approved by HUD or a government agency.
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