If you have been struggling financially, or you simply have goals you do not have the financial resources to achieve during retirement, you may have heard it suggested that you should take out a reverse mortgage.
While many homeowners are familiar with reverse mortgages, there are quite a few senior citizens who do not know what they are or what benefits they offer.
This FAQ should answer your basic questions concerning getting a reverse mortgage in San Diego.
Q: What does it mean to get a reverse mortgage?
A: The reverse mortgage meaning is this: You take out a loan against the equity you own in your San Diego home. This provides you with cash, which you can take in installments or as a lump sum.
Q: Is a reverse mortgage a loan?
A: Yes, it is, as just stated above. Sometimes we state that a reverse mortgage “converts” the equity in your home into cash, but this is just a colloquial way of putting it. It is much more accurate to state that you are borrowing against that equity.
Q: Do I need to pay back a reverse mortgage? If so, when?
A: In theory, yes, but you get to wait for a “maturity event.” If you sell the home, that would mean your loan is due. If every borrower on the mortgage dies, that also would mean the loan is due.
You do not need to make any monthly payments while utilizing the reverse mortgage. There are fees and closing costs to account for, but these are generally not too expensive.
Q: Can I stay in my home if I take out a reverse mortgage?
A: Absolutely. A reverse mortgage is designed to allow you to remain in your home for as long as you want.
Q: How can I use the reverse mortgage income?
A: You have complete freedom to decide that for yourself. Some ideas include paying off medical bills, building an emergency fund, raising your overall standard of living each month, upgrading your home, putting a down payment on a vacation home, taking a trip, making investments, and so on.
Q: Will the reverse mortgage income be taxed?
A: The answer to this question is usually “no.” This will not eliminate your property taxes, however.
Q: What will happen to my other retirement benefits?
A: Your Social Security and Medicare benefits should not change in any way if you take out a reverse mortgage. If there are programs which you qualify for based on your income level rather than your age, however, it is possible that the extra income from your reverse mortgage will disqualify you or reduce your benefits.
Q: Will a reverse mortgage affect my heirs?
A: Yes. If all borrowers on the mortgage pass away, your heirs will still inherit the home, but with a lien against it.
At that point, your heirs have two options. One is to pay off the loan, including both the principal and the interest. This makes it possible to keep the home.
The other option is to sell the home. The proceeds from the sale can be used to pay off the loan. If there are any extra profits after doing so, your heirs will get to keep them.
Q: How do I apply for a reverse mortgage?
A: If you would like to apply for a reverse mortgage, I can help you out. Right now, you can schedule a free consultation. When we meet, we can talk about your needs and goals, and I can answer your questions about reverse mortgages, helping you to decide if a reverse mortgage is right for you.
If you choose to go ahead with the reverse mortgage, I can then guide you through the application process. If you are ready to set up your consultation, please call (619) 857-7191. I look forward to helping you get more out of your retirement.