A reverse mortgage is nothing different than a typical loan. Any homeowner that is 62 years old or older and has some equity in their home can borrow against that home equity they have built in their home. They will then receive these loaned funds as either a single lump sum, a fixed monthly payment or a line of credit. Unlike a typical mortgage that is used to buy a home, a reverse mortgage instead does not require any loan payments from the homeowner.
With a reverse mortgage, the entire loan balance becomes due and payable when one of several things happens. The entire balance is due immediately if the borrower dies, the borrower moves away permanently or the borrower sells their home. Federal regulations require lenders to structure the transaction such that the loan amount does not exceed the homes value. The borrower or borrowers estate can not be held responsible for paying the difference should the loan balance become larger than the homes current value. A couple ways this could potentially happen is if there is a drop in the homes market value or if the borrower lives a very long time.
Give Southern California Trusted Realty Associates a call today if you have any questions regarding a reverse mortgage. We are here for you and would love the chance to earn your business.
We would love to speak with you so please don't hesitate to reach out if you have any questions or comments.