Here at Reverse Loan Solutions, we aim to provide our clients with all of the information they need so that they can make the best decisions regarding their financial well-being. Usually, this means that people get in touch with us directly so that we can answer their questions or provide customized solutions. However, we also provide general information on this site so that people can quickly gain a better understanding of what reverse mortgages can offer. This reverse mortgage FAQ section, for example, is part of that effort.
If you have questions about information found in our reverse mortgage FAQ page, or about California reverse mortgage loans in general, contact us today. We can be reached at 800-791-5626 or through our online contact form. Our loan experts would be happy to answer any questions that are not covered in our reverse mortgage FAQ section.
Reverse Mortgage FAQ: Preliminary Questions
What is a reverse mortgage?
It is a type of loan available to seniors 62 years or older, where the equity you have in your primary residence is converted into cash. Instead of you having to make monthly payments to the lender, it is the lender who will make payments to you. That is why it is called a ‘reverse’ mortgage.
What are the requirements for this type of mortgage?
First of all, you need to be 62 years old or older (though a non-borrowing spouse can be younger). Second, you need to own your home. Finally, you need to be living in that home a minimum of 183 days per calendar year as your primary residence. So, for example, if you plan to take out a reverse mortgage for your home in Los Angeles county, Ventura county, or Santa Barbara county, but you are actually living outside of California, the third requirement will not be met.
How will payments be received?
You can choose to receive payments from a reverse mortgage loan in various ways. There may be a lump sum payment, either for the full amount or a partial amount. You can opt to receive monthly payments from the lender. A line of credit can be set up, or you can choose some hybrid version of these. For more specifics, beyond this reverse mortgage FAQ, you can refer to the terms in your particular loan agreement or contact your reverse mortgage lender directly.
Reverse Mortgage FAQ: Other Questions
Who ends up owning the property?
Entering into a reverse mortgage does not result in you losing ownership over your home. You will continue to own the property throughout the life of the loan. When the loan becomes due, you or your heirs can choose to sell the home to repay the loan balance, pay the balance due out of pocket, or refinance the home to pay off the loan balance.
How much will the proceeds be from my reverse mortgage loan?
There are several factors which are considered when determining loan proceeds for a reverse mortgage. Age is a factor, so an older borrower will generally receive a larger amount compared to a younger one, holding other variables constant.
Other factors include the amount of equity you have in the home, the remaining mortgage amount on that property (if any), and current market rates for reverse mortgages. Aside from this reverse mortgage FAQ, we also provide a reverse mortgage calculator, which can help provide more concrete numbers regarding loan proceeds.
What regular payments will I need to make?
In a reverse mortgage, it is generally the lender who makes payments to the borrower, not vice-versa. However, you will have certain regular costs that are obligatory. These include insurance fees, property taxes, and maintenance costs for the home. These payments are important because failure to keep them current can cause the reverse mortgage to become due.
How will a reverse mortgage affect my other benefits?
If you receive a pension, Social Security, Medicare or something similar, these will continue even if you take out a reverse mortgage. In fact, relying on reverse mortgage proceeds can even allow you to delay making use of Social Security, which may cause your benefits to grow. That said, benefits that are based on income, such as Medicaid, may be affected. For more information, aside from this reverse mortgage FAQ, you can consult with your financial advisor, or get in touch with us directly.
What happens if the value of the loan becomes larger than the value of the residence?
The amount of the loan that is due during repayment cannot end up higher than the value of the property at the time when the loan is due. This is what is meant when reverse mortgages are referred to as ‘non-recourse’ loans. This cap, or ceiling on the loan amount, offers seniors and their families additional peace of mind.
Get Answers to Your Reverse Mortgage FAQs
For more information regarding this reverse mortgage FAQ page, reverse mortgage pros and cons, or to get answers to other California reverse mortgage loan questions, please give us a call at 800-791-5626. Our California reverse mortgage lenders would be happy to provide the information that you need, as well as offer other customized advice and solutions.