Advantages of reverse mortgage loans in California
For many California homeowners, a reverse mortgage may provide flexibility and breathing room in retirement—especially given the high cost of living in the ‘Golden State’. Here are a few of the advantages to a reverse mortgage:
Eliminate monthly mortgage payments1
Many California seniors still carry mortgage debt into retirement. A reverse mortgage does not require you to make monthly mortgage payments, as long as you continue paying property taxes, insurance, maintain the home, and comply with loan terms.
Access tax-free funds2
Proceeds from a reverse mortgage generally aren’t considered taxable income by the federal government. Funds may be used for everyday living expenses, healthcare costs, home improvements, or other financial needs.
Stay in your home3
You can retain ownership of your home and continue living in a familiar setting while accessing your equity, as long as loan obligations such as property taxes, insurance, and maintenance are met.
Non-recourse loan protection4
HECM reverse mortgages are non-recourse loans, meaning neither you nor your heirs will ever owe more than the home’s value at the time of repayment. If the loan balance exceeds the property value, FHA insurance covers the difference on insured loans up to the maximum claim amount.
Flexible payout options
HECM reverse mortgages offer several ways to receive funds, including a lump sum, monthly payments, a line of credit that grows when unused5, or a combination of options that fits your needs.
Maximize California’s high property values
California’s higher than average home prices may allow eligible homeowners to access more equity than in many other states, especially with a proprietary, jumbo reverse mortgage loan.
1The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
2This is not tax advice; borrowers should consult a tax professional.
3The right to remain in the home is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms
4Non-recourse means that you, or your estate, can’t owe more than the value of your home when the loan becomes due and the home is sold.
Non-recourse means that if you default on the loan, or if the loan cannot otherwise be repaid, the lender cannot look to your other assets (or your estate’s assets) to meet the outstanding balance on your loan.
5Available only for HECM reverse mortgage loans with the line of credit option selected by the borrower.
These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.
