A reverse mortgage is a mortgage possibility available to retirees ages sixty-two and up that are in need of additional income. This loan works much differently than a traditional mortgage. As you look to spend your retirement years in Redding,CA–read below to find if a reverse mortgage works for you.
What Is The Difference Between A Reverse Mortgage And A Traditional Mortgage?
In a traditional mortgage, the borrower borrows from the lender and pays back the borrowed money over time with interest. These mortgage payments are paid monthly, and as they are, the amount of ownership the borrower has in the house increases. By the time the last payment is paid, you own the home completely.
Reverse mortgages work opposite to traditional mortgages. They start with a homeowner that is sixty-two years or older, that owns their house outright, and wishes to borrow against the value of the home. Reverse mortgages are typically taken out by the “house rich, cash poor” crowd that are in need of additional retirement income or long-term assistance. The homeowner is then borrowing against the value of the home they already own, to receive payments off the value of the house as a line of credit, or month to month. The repayment of this mortgage is not due until the homeowner dies, moves out, or sells the home. This is an ideal mortgage opportunity for someone who plans on staying in the home they’re in for the rest of their life. They can borrow up to the value of the house against the value of the house, and their children can pay off the mortgage when the parent passes.
What Are Reverse Mortgages Good For?
Reverse mortgages are typically taken out for long term care. Long term care can cover home care, assisted living, and even insurance. Because the mortgage is only good if the senior is living in the house, this is not an option if they cannot be cared for in home. In this scenario, the senior can borrow up to 70% of their home.
What Are The DownSides?
While reverse mortgages appear to be the go-to for cash in later years, they aren’t unless the senior wants to borrow a large amount of money. Reverse mortgages also still come with the fees attached to a traditional mortgage. It is wise to explore all potential cash generating options to find out which will meet your need.
How Do I Know If I Apply?
To apply for a reverse mortgage you must be sixty-two years or older, owner of a home, title holder and resident of the home, in no federal debt, and already capable of paying bills as a homeowner (the loan is their to supplement other income).
A reverse mortgage is the best of both worlds for a house-rich senior. It allows them to essentially sell their house while staying in it. Contact a lending agency in Redding, CA and find out how to take out a reverse mortgage on your home.
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