Reverse mortgage loans are a popular financial option for seniors in San Luis Obispo, California. A reverse mortgage is a type of loan that allows homeowners to tap into their home’s equity.
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.
How Does a Reverse Mortgage Work?
Reverse mortgages are a financial product that can be used by seniors in San Luis Obispo to access a portion of their home equity. A reverse mortgage is a loan that allows homeowners to borrow money against the equity in their home without having to make monthly mortgage payments. They only have to handle property charges, like insurance and taxes, and upkeep. The loan is repaid when the homeowner passes away, sells the home or moves out of the home.
Many San Luis Obiso residents who have reverse mortgages are able to capitalize on California’s rising real estate prices and tap into their home equity, helping them realize their gains without needing to sell their home and move to a smaller home or less expensive area.
Reverse Mortgage Benefits
People get reverse mortgages for many reasons, including:
Access To Cash
A reverse mortgage loan allows borrowers to access a portion of their home equity in the form of cash, which can be used to cover expenses, pay off debt or supplement retirement income.
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 until they sell their home. With a reverse mortgage, you can stay in your home and benefit from its appreciation, especially if you’re in a market with premier real estate, like San Luis Obispo.
No Monthly Mortgage Payments
With a reverse mortgage, borrowers are not required to make monthly mortgage payments. Instead, they must pay property charges, like insurance and taxes, and maintain upkeep. The loan is a non-recourse loan, which means neither the borrowers nor the heirs will owe more than the home is worth at the time it is sold.***
Portfolio Hedging
Reverse mortgages 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.*
Flexibility
Borrowers have flexibility in how they receive their funds, with options including a lump sum payment, monthly payments, a line of credit or a combination of these.
Stay in the Home
Reverse mortgage borrowers can continue to live in their home and maintain ownership, as long as they comply with the loan terms.
Government-insured
Most reverse mortgage loans are insured by the Federal Housing Administration (FHA), which offers additional consumer protections and can help borrowers access more funds than they might otherwise qualify for.
Interested in a Reverse Mortgage in San Luis Obisbo?
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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.**There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.