Reverse mortgages are becoming very popular for Orange County, CA retirees. With interest rates remaining low, which is affecting those living on a fixed income, being able to access equity sitting in a home can be a life saver. Many seniors, who had been struggling, are pleasantly surprised to learn the benefits of a reverse mortgage.
Difference Between Reverse and “Forward” Mortgages
A reverse mortgage allows a homeowner to borrow against the equity in their home. While sounding similar to a “forward” mortgage, a reverse mortgage does not require monthly payments. The new loan can either be in the form of an equity line that can increase over time, a lump sum payout, a fixed monthly payment, or some combination. There is minimal upfront cost, and closing costs can be included in the loan.
Orange County Reverse Mortgage Example
Many people in Orange County have enough equity in their home to get a Reverse Mortgage. The new loan can also be used to pay off a forward mortgage. For example, lets say that Jim Smith in Irvine, CA owns a home that is worth $450,000. He owes $90,000 and has a payment of $1,100 per month. Depending on Jim’s age, he could get a new Reverse Mortgage that would not only payoff his current loan, but also pull cash out and have no monthly payment. The amount of the new Reverse Mortgage is very much based on the borrowers age, along with the property value. If we assume Jim to be 70 years old, he could pay off the loan he has and still have more than $120,000 left over, with $0 monthly payment.
When Do I Pay Back to Reverse Mortgage?
There are no payments due on a reverse mortgage. The loan is repaid once you no longer live in your home as your primary residence, whether you (the last remaining spouse in the case of couples) pass away, sell the home, or permanently move out. The amount owed can never (or will never) exceed the value of your home. Also, a very important fact that is commonly misunderstood, if the home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goers to you or your estate.
The most important thing to do in considering your options is to talk to an experienced FHA Reverse Mortgage Lender located in Orange County. Your loan officer should be able to provide multiple solutions and guidance as to whether an Orange County Reverse Mortgage makes sense for your situation.
Authored by Tim Storm, an Orange County, CA Loan Officer – Please contact my office at Trust One Mortgage for more information about an Orange County, CA home loan. 877-786-4243 x 7.
Contact us for your Orange County FHA Mortgage:
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877.786.4243 x 7 | tstorm (at) ochomebuyerloans.com
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