Reverse mortgage loans are a popular financing option for seniors in Palm Desert, California, allowing homeowners to tap into their home equity.
How Does a Reverse Mortgage Loan Work?
A reverse mortgage loan allows homeowners 62 or older to access a portion of their home’s equity without having to sell their home, give up the title or make monthly mortgage payments. Instead, the borrower must pay property charges, like taxes, insurance and home maintenance. The loan is paid back when the borrower no longer occupies the home.
The amount that can be borrowed depends on several factors, including the borrower’s age, home value, interest rates and the type of reverse mortgage loan. Borrowers have several options for receiving the funds, including a lump sum, monthly payments, a line of credit or a combination of these options.
Our Reverse Mortgage Loans in Palm Desert, California
Home Equity Conversion Mortgage (HECM)
This is the most common type of reverse mortgage loan and is insured by the Federal Housing Administration (FHA). This provides a host of consumer protections, such as a non-recourse feature that guarantees the sale of the home will cover the balance of the reverse mortgage loan, regardless of the market value of the home at the time of sale.*
HECM for Purchase (H4P)
An H4P is a type of reverse mortgage specifically designed for seniors who want to purchase a new home. This can be a useful option for seniors who want to downsize, move closer to family or relocate to a more accessible home.
It can greatly increase home buying power and enable borrowers to move to a more expensive area than their current residence. Like a traditional HECM, the borrower is not required to make monthly mortgage payments. Instead, they only need to take care of property charges like taxes, insurance and home upkeep.
Jumbo Reverse Mortgage Loan
Jumbo reverse mortgage loans are for high-value homes exceeding the loan limit of $1,149,825 set by the FHA for HECMs. The amount of cash available is based on the appraised value of the home, and borrowers typically have more flexibility in payment options.
Reverse Mortgage Loan Benefits
People get reverse mortgages for many reasons, including:
No Monthly Mortgage Payments
With a reverse mortgage loan, borrowers are not required to make monthly mortgage payments. Instead, they must pay property charges, like insurance, taxes and home upkeep. This helps preserve monthly cash flow, which can be extremely useful for seniors on a fixed income, especially in times of inflation.
Long-Term Care (LTC)
Reverse mortgage loan proceeds are often used for healthcare-related costs. For example, if a homeowner needs to hire an in-home caregiver or pay for other long-term care services. This is particularly helpful for seniors who want to age in place in their homes.
Portfolio Hedging**
Reverse mortgage loans can also be used as a buffer asset to protect investments in down markets. Instead of selling off investments at a loss, a borrower could use their loan proceeds to cover expenses until the markets recover.**
Realize Home Equity Gains
Home equity has hit all-time highs in recent years, but without a reverse mortgage loan, most homeowners are unable to benefit from equity increases without selling their homes. A reverse mortgage offers homeowners the ability to benefit from home equity appreciation while also owning and living in the home.
Financial Flexibility
Borrowers have flexibility in how they receive their funds. A line of credit with guaranteed growth is a popular option (applies to unused funds), but borrowers can also choose a lump sum payment, monthly payments or a combination of these options.
Own and Live in the Home
Reverse mortgage borrowers retain complete ownership and can continue to live in their homes as long as they comply with the loan terms, which include using the home as a primary residence.
Government-Insured
HECM reverse mortgage loans are insured by the Federal Housing Administration (FHA), which offers additional consumer protections, making it one of the safest loans available today.
Interested in a Reverse Mortgage in Palm Desert, California?
Fill out the form and Rob or a member of the Kanyur Team will be in touch!
*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.
**This advertisement does not constitute tax or financial advice. Please consult a tax and/or financial advisor regarding your specific situation.