Although there are relatively few homes for sale in Oceanside, CA, home prices have risen only slightly more than 1-percent over the past several months. Slow growth and stagnant home values have driven many homeowners to hold their property until they can sell for a significant profit or any profit at all. However, holding a house can be difficult if money is needed right away for living expenses, home repairs or medical bills.
One way that owners over 62 can pull much-needed cash from their home without giving up a future, profitable sale is through an Oceanside reverse mortgage. Unlike taking out an equity loan, which you have to pay back month after month, a reverse mortgage allows homeowners to pull equity from their home without making monthly payments. In fact, all mortgage payments are cut out, and the homeowner can opt to receive a monthly check instead.
Reverse mortgages are government-backed mortgage programs insured by the FHA. In a reverse mortgage, the balance on the home is zeroed out through an advance on the reverse mortgage or by the homeowner. The equity remaining – equaling roughly the current market value of the home – is then paid back to the homeowner according to the payment plan they choose. Owners can choose to receive monthly payments, a line of credit, one-lump sum or a combination of monthly payments and larger disbursements.
The homeowner doesn’t have to move and can continue to live in the home until the market price on their home improves and they sell at a profit. Upon sale of the home, the reverse mortgage must be paid out of the owner’s profit at closing. This is a very attractive option for owners who live in areas where home values have dropped significantly since many homeowners find that their home is now worth less than what they paid for it. Retirees may also find that they can’t afford to live the large home where they raised their family without relief from mortgage payments and the extra income provided by a reverse mortgage.
The amount of money available depends on several factors including the applicant’s age, value of the home and amount owed on the home. Since reverse mortgages are meant to be doled out over the remainder of the owner’s life, younger applicants might receive lower monthly payments than older applicants. The value of the home also plays a role. Homes worth more will generate larger payments. However, there is a cap to the amount of money that can be pulled from the equity, which varies from state to state.
Although they are relatively new compared to other mortgage programs, reverse mortgages are becoming increasingly popular. In light of current economic conditions and an unpredictable housing market, many senior homeowners find stability and security through a reverse mortgage.