Reverse mortgages (also referred to as "home equity conversion loans") enable older homeowners to use their equity without the necessity of selling their home. The lending institution gives you funds determined by your home equity amount; you get a lump sum, a payment every month or a line of credit. Repayment isn't required until after the borrower puts his home up for sale, moves (such as to a retirement community) or dies. After you sell your property or is no longer used as your primary residence, you (or your estate) are required to repay the lender for the funds you got from the reverse mortgage as well as interest among other finance charges.
Typically, reverse mortgages require you be at least 62 years old, have a low or zero balance owed against the home and maintain the house as your principal residence.
Reverse mortgages are ideal for retired homeowners or those who are no longer working but have a need to add to their income. Rates of interest may be fixed or adjustable and the funds are nontaxable and do not interfere with Medicare or Social Security benefits. Your residence can never be at risk of being taken away from you by the lender or put up for sale without your consent if you live longer than the loan term - even if the property value dips under the loan balance. Call us at (973) 601-2122 if you want to explore the advantages of reverse mortgages.
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