Is a reverse mortgage right for you? Are you 62 or older with low income and high equity in your home? If so, a reverse mortgage just might be the right tool for your household budget. A reverse mortgage will allow you to stay in your home as long as you live (providing you keep your property taxes and property insurance current). You also won’t have to make that pesky mortgage payment every month! With home prices still high, this would be the best time to get your home appraised, as, the higher the appraisal, the more equity you can use for cash, if that is necessary. The first move should be to give Michael Mitchell a call at 530-406-2200 or 707-337-5970 and talk about your current and long term financial needs. If a reverse mortgage is the answer, then now is the time to get started!
What is a Reverse Mortgage?
Unlike a traditional mortgage that you pay back each month, a reverse mortgage makes payments to you. You can get these payments in a lump sum to cover an unexpected bill, or as a regular supplement to your monthly income, or at intervals and amounts that are best for you.
We offer reverse mortgage loans that require no repayment as long as your home is your principal residence and you fulfill the borrower’s obligations, such as continuing to maintain the property and paying your property taxes and hazard insurance. You pay the money back plus interest and other charges when you sell or permanently move out of your home.
If you pass away, the loan is due, but the amount due will always be the lesser of your loan balance or the market value of your home. Even if the amount you borrowed eventually exceeds the value of your home, you or your heirs will never owe more than the value of your home. All proceeds in excess of what you owe belong to your estate, which means the remaining equity in your home can be passed on to your heirs.
Unlike the loan balance of a conventional mortgage, which becomes smaller with each monthly payment, the loan balance of a reverse mortgage grows larger over time.
As you receive your payments, your equity – the amount of cash you have left after selling and paying off the loan generally grows smaller. But with a reverse mortgage you can never owe more than your home’s value at the time the loan is repaid
If you own your home free and clear or if you have very little mortgage principal outstanding, a reverse mortgage may be a good option for you.
Advantages / Benefits:
- Free you from existing loans on the property: The current mortgage and any other liens against the property will be paid off by proceeds from the reverse mortgage.
- The loan is not due as long as you live in the property: There will be no mortgage payments as long as you are current with your property taxes, have an active homeowner’s insurance policy, maintain the property according to the FHA’s minimum standards and pay other related charges such as H.O.A. dues, water/sewage, etc.
- A line of credit with growth: You may also choose to have a line of credit that grows every month.
- Use the proceeds for any purpose: The loan proceeds can be used to pay off credit card bills, medical insurance, or anything you can think of.
- No prepayment penalty: You may terminate the loan anytime you like by paying off the loan balance without any penalty
- Limit on the amount you owe: You will never owe the lender more than the appraised value of your property since the program is FHA-insured.
- Closing costs may be financed: Almost all of the closing costs can be financed as part of the loan, which means no out-of-pocket expense for you if you have equity in the property to pay for such closing costs.
- Social Security & Medicare unaffected: The loan will not affect your existing Social Security and Medicare benefits.
Reverse mortgages are tax-free and following are the payment plans available:
- A single lump sum of cash
- Regular monthly payments as long as at least one borrower lives and occupies your home
- Regular monthly payments for a fixed period of time
- A line of credit paid at your discretion
- A combination of monthly payments with line of credit
- 62 years of age or older
- Own a property or paid-down a considerable amount
- Occupy the property as primary residence
- Not be delinquent on any federal debt
- Have financial resources to continue to make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
- Participate in a consumer information session given by a HUD-approved HECM counselor
- Income, assets, monthly living expenses, and credit history will be verified
- Timely payment of real estate taxes, hazard and flood insurance premiums will be verified
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