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In a reverse mortgage loan (also called a home equity conversion loan), homeowners of a certain age may use home equity for living expenses without selling their homes. The lender pays out funds based on the equity you've accrued in your home; you receive a lump sum, a monthly payment or a line of credit. The loan does not have to be paid back until the homeowner sells his home, moves away, or passes away. At the time your home has been sold or you no longer use it as your main residence, you (or your estate) are required to pay back the lending institution for the funds you obtained from your reverse mortgage as well as interest and other finance charges.
Who is Eligible?
The requirements of a reverse mortgage loan normally include being 62 or older, using the house as your primary living place, and holding a low remaining mortgage balance or having paid it off.
Homeowners who live on a fixed income and need additional funds find reverse mortgages helpful for their situation. Social Security and Medicare benefits aren't affected; and the funds are not taxable. Reverse Mortgages can have adjustable or fixed rates. The residence can never be at risk of being taken away by the lender or put up for sale against your will if you outlive the loan term - even if the current property value creeps under the balance of the loan. If you'd like to learn more about reverse mortgages, please call us at (512) 422-9036.
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