Reverse Mortgages in Redding, CA
Traditional mortgages require that homeowners pay their lender on a monthly basis. The more money they pay, the more equity they gain. But many homeowners struggle to meet their mortgage and all their other financial responsibilities as they grow older. Because of this, the Home Equity Conversion Mortgage (HECM, also known as a reverse mortgage) was created.
Through a reverse mortgage, homeowners receive money from their lender instead of paying money to their lender. Such a loan can be extremely beneficial for homeowners who are planning on living in their homes for the long-term and who are in need of extra financial assistance or security. US Lending Co can help you with Reverse Mortgages in Redding, CA
What is a Reverse Mortgage?
A reverse mortgage allows eligible homeowners to access the equity in their homes in a variety of different ways, all of which are tax-free. A reverse mortgage can be incredibly beneficial for homeowners in need of financial assistance or flexibility who are planning to live out the rest of their lives in their home.
How do Interest rates work for a reverse mortgage?
Reverse mortgages come with either a fixed interest rate* or an adjustable interest rate*. These interest rates are based on various factors, including the current market, the homeowner’s credit score, the amount of the reverse mortgage, and more. Interest is calculated daily and added to the balance of the loan monthly. However, what makes a reverse mortgage unique is that the homeowner will not have to pay the loan back (or the interest on that loan) until the house is sold, the owner moves out of the house, the owner doesn’t meet their loan obligations, or the owner passes away.
One important thing to keep in mind is that borrowers who choose to receive their reverse mortgage as a line of credit will only pay interest on the funds withdrawn, not the amount that is available to them. In fact, the money available in the line of credit will actually earn interest*.
How do payments work for a reverse mortgage?
The homeowner can receive their loan in several different ways. They can choose to receive monthly payments or a line of credit. However, the amount of cash available to the owner is based on the type of reverse mortgage that they choose. For example, an adjustable-rate reverse mortgage requires that the borrower chooses from a line of credit or monthly payments.
If the borrower chooses a fixed-rate reverse mortgage, access to funds is more limited. Although borrowers can still request monthly payments as well as a line of credit, they can only withdraw ten percent of their principal limit.
Benefits of a reverse mortgage
Homeowners eligible for a reverse mortgage can enjoy the following benefits:
Eligibility Requirements for a Reverse Mortgage
To be eligible for a reverse mortgage, the borrower must meet the following requirements: