What is a reverse mortgage?

A reverse mortgage is a financial product available to homeowners aged 62 or older in California that allows them to access the equity in their home without having to make monthly payments or sell the home. With a reverse mortgage, the homeowner receives either a lump sum or monthly payments from the lender. The homeowner retains ownership of the home and is responsible for the upkeep, taxes, and insurance. A reverse mortgage works differently than a traditional mortgage. When a homeowner takes out a traditional mortgage, they make monthly payments to pay back the principal balance and the interest. With a reverse mortgage, the homeowner receives payments from the lender and the principal balance increases over time instead of decreasing. The lender is repaid when the homeowner moves out, sells the home, or dies. When applying for a reverse mortgage, the homeowner must meet certain requirements. These include being 62 years of age or older, owning their home outright or having a low outstanding mortgage balance, and passing a financial assessment to show they have the resources to manage the new loan. If a homeowner in California is eligible and in need of additional funds, a reverse mortgage may be a good option. The homeowner will not have to make monthly payments and they retain ownership of the home. However, it is important for the homeowner to understand all the rules and obligations that come with a reverse mortgage in California before signing the papers.

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What is a reverse mortgage?

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