If you are a senior citizen in need of cash for various reasons such as living expenses or healthcare expenses, you may be able to tap into your home equity by taking advantage of a reverse mortgage. A reverse mortgage is a loan that allows you to borrow part of your home equity as tax-free income. If you are an older homeowner located in the areas of Carmel Valley, Carlsbad, or Encinitas, California, and are interested in learning more about your reverse mortgage options, Mitchell Bonilla with C2 Financial is here to help. Continue reading to learn more about using a reverse mortgage to obtain the extra cash you need in retirement.

Reverse Mortgage: Essential Information

A reverse mortgage is a loan that allows a homeowner who is of the age of 62 years or older to convert the equity that has built up in their home into either a line of credit or a cash sum. Instead of a borrower having to make monthly payments to a lender like with a traditional loan, a lender makes payments to the borrower. So with a reverse mortgage, essentially a lender is taking a loan out of your home’s equity and then paying it back to you. A reverse mortgage can be used to pay off the rest of a homeowner’s existing mortgage if it has not yet been paid off, and any additional funds can be used for any purpose the borrower wants, including making home renovations, paying living and medical expenses, paying off debt, or even purchasing a new home. The borrower will remain the owner of a home in a reverse mortgage, and the mortgage only becomes due when the borrower moves out or passes away. As long as the borrower remains living in the home, they are not required to make any monthly mortgage payments, however it is important to note that they are responsible for interest and other fees on the reverse mortgage.

What Are The Benefits Of A Reverse Mortgage?

Although a reverse mortgage may not be suitable for all borrowers, it can offer several advantages for some. First of all, a borrower is not required to make monthly mortgage payments, in fact, they will instead be paid to the borrower. Depending on each borrower’s unique needs, they can receive the money as a partial or lump sum, and payments can be received as cash, a line of credit, or a combination of both. Because reverse mortgages are non-recourse loans, a borrower is protected from fluctuations in the market that may cause a decrease in home value, and the compensation you receive through this loan is tax free.

If you are interested in learning more about a reverse mortgage in Carmel Valley, Carlsbad, or Encinitas, California, contact Mitchell Bonilla with C2 Financial today for a consultation.