California Reverse Mortgage

you may have heard the term “Reverse Mortgage” before; What are Reverse Mortgages? If you are 62 years of age or older, they are a way to borrow against the equity in your home (the value of your home minus any mortgage debt you now have) to provide you with tax-free income. You continue to own, and live in, the home for the life of the loan. There are no loan payments until the loan ends.

• A lump sum of cash.
• Regular monthly payments for your life or for as long as you live in the home.
• Regular monthly payments for a fixed length of time.
• A line of credit to draw on when you need it.
• A combination of options 2 & 4 or options 3 & 4 above.

You may be familiar with conventional mortgages. With these, you borrow money and make payments to build equity in a home. You pay off the debt by making regular payments from your income until the loan principal and interest are paid. As you make payments, your equity (the home's value minus any mortgage debt) increases and your debt (loan balance) shrinks. If you fail to make regular payments, you could lose your home. With a Reverse Mortgage, you borrow against the equity you have built in your home to produce income, or a line of credit. The debt is paid off at the end of the loan by selling the home, or using other assets to pay off the loan. You cannot lose the house during the life of the Reverse Mortgage loan for not making payments, because you don't have any payments to make. Meanwhile, the debt (loan balance including interest and fees) increases and your equity shrinks.

A Reverse Mortgage might be worth considering if:

• You want to enhance your lifestyle and enjoy your golden years.
• You are committed to staying in your home, either because you don't want to leave or because other housing alternatives are unappealing or unaffordable.
• You have a regular need for additional income to live on and your only significant asset is your home.
• You want a cushion for major expenses such as medical bills for a serious or long-term condition, or for major home repairs.
• You want the peace-of-mind that comes from knowing your financial needs are taken care of.
• You own your home free of debt or you have a small first mortgage.
• You don't plan to leave your home to your heirs through inheritance.

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