Reverse Mortgages - Using the Equity in Your Home to Retire in Style.

The reverse mortgage is a special type of home refinance for a person 62 years old or older.  This is a way that a person can pull money out of his home without having to make payments on the line of credit or lump sum that they receive.  With this type of program there is no payment or repayment of the loan and the money may be distributed in one lump sum payment, used to create a fixed income for the duration of life, or it may be used as a line of credit to be drawn upon as needed.  These options can also be combined depending upon the homeowner’s particular situation.
 

Down and out financially doesn’t need to be your situation in life to use this type of loan.  You may just want to pay off an existing loan balance and not have any more payments.  Freeing up the equity in your home can improve the quality of your life.  The money can be used for vacationing, paying medical bills, sending a grandchild to college, or just supplementing retirement income.  You have worked hard to build the equity in your home, why not enjoy it now!
 

Unlike a conventional loan, there are no credit standards or income qualifications.  The two most important factors are your age and the value of your home.  The reverse mortgage process usually will take about 30 days before you can receive your money.
 

When you use this type of program the title to the property will stay in your name, you are not transferring the ownership of the home.  If at some point you choose to sell your home and move to another residence, you can.  What goes to the bank would be the closing costs, principle borrowed and interest on the loan calculated daily.  The remaining equity in the home is all yours.  Another commonly asked question is, are there any negative tax consequences for using a reverse mortgage?  The answer is that it is just like any other type of refinance and is not taxable income.
 

When your heirs receive your home they will need to either refinance the house, if they choose to retain it, or they will need to sell it.  They will receive the remaining equity in the home, which would be the difference between the principal borrowed, the accrued interest, closing costs, and commissions.
 

One of the safeguards the federal government has put in place to make sure the consumer understands exactly how this type of product works is the requirement that you participate in a HUD-approved counseling session.  This can be done over the phone and there are several different agencies who can offer this service to you free of charge.  Once you have completed the counseling session, you will be mailed a certification to validate that you have met the federal government requirements to be counseled by an independent third party.
 

In conclusion, if you would like to use the equity in your home to more thoroughly enjoy your golden years, it is a fairly simple process to find out how much a reverse mortgage can benefit you.  All you need to know is the approximate value of your home and your age and you will be able to examine all different types of products with a range of options.
 

Co-written by Randy Nathan and James Dedolph, creators of HomeSniffer.com where you can find Homes for Sale in San Diego and LoanSniffer.net where you can find the best rate and terms for Homes Loans in San Diego .  Both of these sites are a good resource for information about San Diego Real Estate .

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