With a regular mortgage, a bank or other lender will buy a house and then you spend several years paying them back. A reverse mortgage goes in the opposite direction: you start by owning (or at least mostly owning) a home and then take out a loan based on its value. Reverse mortgages are only available to homeowners age 62 and up, and they don’t need paying back until after you pass away. Reverse mortgages have pros and cons like any other loan, but there are a few reasons in particular why you should take one out.
1. You Need The Money
Owning a home can be a good investment in the future, and it’s one of the main reasons why Americans in general and people in Sacramento, CA in particular don’t have as much savings as people in other countries. However, that investment won’t do you much good when the money is all tied up in your house. A reverse mortgage lets you pay out your investment and use it for medical bills, travel costs, and anything else you might need.
2. Your Home Value Is High
Home prices in Sacramento, CA can fluctuate depending on market demand and national trends. You also see interest rates go up and down, and that changes how much value you can get from your loan. There are other changes based on how old you are when you take out the reverse mortgage and how much you still owe on any remaining mortgage or home equity loan. Choosing the right moment can make a big difference in how much money you can get from a reverse mortgage, so choose your moment carefully.
3. Your Kids Don’t Need Your House
When you take out a reverse mortgage, it’ll be up to your kids to pay back the amount you borrowed. They can do so by paying in installments, or they can sell your home and keep the difference between the sale price and the mortgage amount. The extra debt may not be what you want for your kids if you want your children to live in your home one day, but if your kids own their own homes a reverse mortgage isn’t a bad idea.
4. You Have No Plans To Move
Many seniors move out of their family homes as they age. Moving around and climbing a lot of stairs can get harder as you grow older, plus you don’t need as much space once your kids have all moved out. You lose out on a lot of reverse-mortgage benefits when you sell your home, so the best time to take one out is when you know you won’t move or sell your home again.
A reverse mortgage can provide some much-needed cash in a person’s twilight years, and depending on which one you get you can take out a lump sum, get monthly payments, or create a line of credit that can keep your interest payments down. So if you live in Sacramento, CA and you’re considering a reverse mortgage, contact Professional Mortgage Associates. We’ll be happy to answer all your home equity and mortgage questions.