Reverse Mortgage: Could the Mortgage Companies Help You Retire?

Tim Worstall
LoanBiz Columnist

Article Rating , 4 out of 5 based on 6 votes

A reverse mortgage is a way of unlocking your home equity to pay for your retirement. After you've worked hard for forty years, saved money to build a pension, and paid off that loan from one of the mortgage companies, here comes retirement. You can convert your savings into an income by buying an annuity, but there's one more thing you can do to increase your monthly income.

A reverse mortgage, something entirely compatible with the California mortgage regulations and market, can help you unlock the equity tied up in your house. It sounds almost perverse to save for 30 years just to borrow again, but a reverse mortgage can be a good idea for both you and the mortgage companies. A reverse mortgage works just like a mortgage, except in reverse, you are drawing out money rather than paying it in.

California Mortgage Law and Reverse Mortgages

Both federal and California mortgage laws have approved and regulate reverse mortgages, so many mortgage companies are happy to offer them. You normally have to be over 62 to apply for one and obviously, you need to own your own home. Effectively, one of the mortgage companies is buying the house from you. You can take the money as a lump sum or in a series of payments. You are able to stay in your home for the rest of your life, or you can, if you wish, move out or sell the house. The amount you owe the mortgage company will be deducted from what you receive. If you are equity rich and income poor, a reverse mortgage can be an excellent way of changing that position.

About the Author
Tim Worstall has a degree in finance and accountancy and writes extensively on matters economic and financial.

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