Reverse Mortgage in
There’s a reason that a reverse mortgage is one of the more popular home loans for seniors. The benefits of a reverse mortgage can help people aged 62 and older enjoy their retirement more fully. A Home Equity Conversion Mortgage (HECM), or reverse loan, allows homeowners to turn the equity on their home into cash that they can use for whatever they want or need, including a new home. A reverse mortgage for purchase will allow you to downsize or move without using all the proceeds from the sale of your home on the new home. And for homes valued above about $1.2 million consider a jumbo reverse mortgage. Read on to learn more about some of the other advantages to a reverse mortgage.
The government categorizes the money from a reverse mortgage as a loan advance, rather than as income. That means, even if you choose to receive the proceeds of your reverse mortgage as a line of credit or a monthly payment, no taxes are levied on the money. With a reverse mortgage, you can convert your equity into cash, completely tax-free. (Please consult your tax professional)
Even though you may choose to receive reverse mortgage payments monthly or a line of credit, you can also opt to receive the whole loan as a lump sum. (In some cases you will be limited to 60% of the total amount you qaulify for to be taken as a lump sum at close of escrow) That way, you can instantly access all of the funds from your home equity, or you can receive it in a combination of the options. There are no restrictions placed on how you use that money, so you can spend it on whatever you want or need.
No Monthly Payments
Although a reverse mortgage accrues interest for the entire life of the loan, you do not have to make a single monthly payment on it. All of the interest is due at the end of the loan. As opposed to a traditional mortgage, you don’t have to worry about making a payment to your lender every month. You will still be responsible for property taxes, hazard insurance, and other fees like homeowners association fees.
Contrary to a common misconception, the bank does not own your home when you get a reverse mortgage on it. You keep the title on the house, and all you have to do is keep occupying it as your primary residence. If your loan lasts until the end of your life, your specified heirs will have an option to purchase or sell the home.
Is a Reverse Mortgage Right For You?
While there are many benefits of a reverse mortgage, costs come along with it. Depending on your situation or your home, there may be other drawbacks as well. Everyone’s financial situation is different, which is why you should take a hard look at yours to see if the benefits outweigh the costs. A reverse mortgage calculator can help you determine whether a reverse mortgage is right for you.
Are you ready to take advantage of the benefits of a reverse mortgage in Oakland? Apply today to get started on your loan.