1-Minute Video: Reverse Mortgage Tustin CA
How Does a Reverse Mortgage Work?
A reverse mortgage is a unique financial tool designed for homeowners who are at least 62 years old and want to turn a portion of their home equity into tax-free cash — all without having to sell their home, give up ownership, or take on a new monthly mortgage payment. It’s an option that’s growing in popularity as more seniors look for ways to supplement their income during retirement.
For many retirees, Social Security and savings accounts like a 401(k) or IRA form the backbone of their retirement plan. However, with the rising cost of living, inflation, and longer life expectancies, those traditional sources of income may not always be enough to comfortably fund one’s golden years. This is where a reverse mortgage can make a real difference.
Turning Equity Into Income
Unlike a traditional mortgage where the homeowner makes monthly payments to a lender, with a reverse mortgage, the lender pays the homeowner. The amount you can borrow depends on several factors, including your age, the appraised value of your home, current interest rates, and the type of reverse mortgage you choose.
The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). With a HECM, you have flexibility in how you receive the funds — as a lump sum, a line of credit, fixed monthly payments, or a combination of these options. The money you receive is not taxable and does not affect Social Security or Medicare benefits.
How Does a Reverse Mortgage Work?
No Monthly Mortgage Payments
One of the most attractive features of a reverse mortgage is that there are no monthly mortgage payments required. Instead, the loan is repaid when you move out of the home, sell the property, or pass away. At that point, the proceeds from the sale of the home go toward repaying the loan balance. Any remaining equity belongs to you or your heirs.
This can be a huge relief for seniors on a fixed income who want to reduce financial stress and maintain their standard of living. It’s also a way to stay in the home you love — the one filled with memories and community connections — while gaining financial peace of mind.
Protections and Peace of Mind
HECM reverse mortgages come with built-in consumer protections. For example, they are non-recourse loans, which means that you or your heirs will never owe more than the home is worth at the time it is sold. Even if the loan balance ends up being more than the value of the home, the FHA insurance covers the difference — not your family.
Additionally, reverse mortgage counseling is required by law before you can apply. This counseling session is conducted by an independent third party to ensure that you fully understand how the loan works and whether it’s a good fit for your financial goals.
Is a Reverse Mortgage Right for You?
A reverse mortgage is not the right fit for everyone, but for the right homeowner, it can be a game-changer. It’s ideal for those who plan to stay in their home long-term and want to eliminate monthly mortgage payments while accessing extra cash for healthcare, home improvements, travel, or simply covering everyday expenses.
How Does a Reverse Mortgage Work?
How Does a Reverse Mortgage Work? Before making a decision, let’s talk. As a fellow senior and Reverse Mortgage Specialist, I’m here to answer any questions and provide you with all the information you’ll need to help you evaluate how a reverse mortgage fits into your overall retirement plan.
Jeff Markell NMLS# 224196
Grandpa Mortgage – U.S. Air Force Veteran
Reverse Mortgages – Mortgage Broker In OC
(714) 614-4040
jeff@empirehomeloans.com
Empire Home Loans, Inc. NMLS# 1839243
Serving all of California
Click to learn the types of Home Loans Jeff and Lee can help you with.
