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How Does A Reverse Mortgage Work in Covina, Fontana, Ontario, Pasadena, Pomona, San Bernadino, CA

 

In a normal mortgage agreement, a bank or financial institution will loan you money to help you buy a property and you will repay the loan over an agreed period of time at an agreed rate of interest. So what is a reverse mortgage and how does it work?  If you own property in Covina CA, Fontana CA, Ontario CA, Pasadena CA, Pomona CA or San Bernardino CA and are about to retire, you might have heard of a reverse mortgage and you might ask yourself

“How does a reverse mortgage work?”

A reverse mortgage is also known as a home equity conversion mortgage (HECM). This type of mortgage is only possible if you are at least 62 years of age and own property with substantial equity. That means you owe little or nothing on your property – you have basically paid of your traditional mortgage. Now you can use the equity in your property to get cash in the form of a reverse mortgage. A financial institution will advance you an agreed amount of money as once of payment or in monthly instalments. You don’t have to repay the loan in monthly instalments. The loan will only fall due when your property is sold or when you no longer live in the property, whichever comes first.

So in a way a reverse mortgage is a deferred mortgage. You realise money using the equity in your home. You use and spend the money as you please. There are of course specific rules that regulate reverse mortgages and that are designed to protect home owners in the event that the loan might eventually exceed the value of your home.

So in short to answer the question “How does a reverse mortgage work?” – if own property with substantial equity and are 62 years or older, you can raise liquid money to enjoy during your golden years, without monthly repayment commitments.

 

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FERNANDO REZA
Futura Financial Inc.
Associate Broker/Mortgage Loan Originator
Office: (626) 442-1888 | Cell: (626) 388-5518 | Fax: (626) 442-8424
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