Reverse mortgages are a popular financial option for seniors in Monterey, California. A reverse mortgage is a type of loan that allows homeowners to tap into their home’s equity.Â
The most popular type of reverse mortgage is the FHA-insured Home Equity Conversion Mortgage (HECM) loan. Unless noted otherwise, we’re referring to HECMs when we talk about reverse mortgages.Â
How Does a Reverse Mortgage Work?
Reverse mortgage loans allow homeowners 62+ to access a portion of the equity in their home without having to make monthly mortgage payments, so long as the borrower takes care of property charges, like insurance and taxes, and upkeep.Â
Reverse mortgages are a great option for seniors in Monterey, California, who want to stay in their homes, but also want or need additional cash flow. The funds from a reverse mortgage can be used for any purpose, including home improvements, medical expenses or to have more fun in retirement.
Reverse mortgages are available to homeowners age 62 and older who own their home outright or have a low mortgage balance that can be paid off at closing with proceeds from the reverse mortgage loan.
Reverse Mortgage Benefits
People get reverse mortgages for many reasons, including:
Cash Flow Management
People may have significant assets but limited cash flow. By taking out a reverse mortgage loan, they can access the equity in their home to supplement their income without having to sell investments or other assets.*
Estate Planning
People may choose to use a reverse mortgage as a part of their estate planning strategy. They may take out a reverse mortgage loan and use the proceeds to pay for expenses or gifts to their heirs while they are alive, rather than waiting until after they pass away.*
Portfolio Hedging
Reverse mortgage loans can provide a hedge against market downturns. If your investment portfolio experiences losses, you can use the funds from your reverse mortgage to cover expenses instead of selling off investments at a loss.*
Realize Home Equity Gains
Home equity hit all-time highs recently, yet many people don’t reap the rewards of gains in the housing market unless they sell their home and move into a smaller property. With a reverse mortgage loan, you can stay in your home and benefit from its appreciation, especially if you’re in a market with expensive real estate, like Monterrey.
Tax Planning
A reverse mortgage can be used to minimize taxes on a person’s estate. By taking out a reverse mortgage and using the proceeds to pay for expenses, they can reduce the size of their taxable estate, potentially reducing the amount of estate taxes owed.*
Home Improvements
A reverse mortgage can be utilized to fund home improvements or repairs. This can be a more cost-effective option than paying for renovations out of pocket or taking out a traditional home equity loan.
It’s important to note that while a reverse mortgage loan can be a useful tool, it’s not right for everyone. Before considering a reverse mortgage, it’s essential to understand the costs and obligations associated with the loan and to speak with an industry professional to determine if it’s the right choice for your unique situation.
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*This advertisement does not constitute tax or financial advice. Please consult a tax and/or financial advisor regarding your specific situation.