California Reverse Mortgages

By: Kevin Stith

California Reverse Mortgages are a different kind of mortgages that are proving to be very popular with senior citizens. A Reverse Mortgage allows the property owner to stay in the house, unlike the regular kind of mortgage that dictates that the homeowner move to a different place when the property is mortgaged.

As with regular mortgages, the loan is provided based on the property equity of the homeowner. However, in this case, even with the equity secured the homeowner can still enjoy the benefits of staying in the mortgaged home while paying the EMI to the mortgage lender. A Reverse Mortgage is a very good option for retired individuals over 62 years of age who would hate to move from home while the same is being mortgaged. Also they need not change their lifestyle, as the Reverse Mortgage amount would provide sufficient funds to maintain the existing one.

Reverse Mortgages provide financial security while enjoying the comfort of one's home after retirement. However, they must be chosen with care. Reverse Mortgages are handled by the companies and lenders handling the regular and multiple mortgages. Customers can negotiate for a good deal after providing them with the requisite data for setting up the initial groundwork for the deal.

Reverse Mortgage lenders provide the mortgage either as a lump sum or a credit line, as per the customer's requirements. California mortgage lenders provide Reverse Mortgages in three categories, viz., Home Equity Conversion Mortgage, Single Purpose Reverse Mortgage, and Proprietary Reverse Mortgage. The first category is federally insured and the other two are offered by the agencies licensed by the government and by banks or private financial mortgage lending institutes.

Homeowners can get the equity appraised by a licensed agent and then apply for the Reverse Mortgage. Since they allow the customers to stay in their homes after the same has been mortgaged, they charge a higher rate of interest compared to the regular mortgage rates. Fee charged by the lender is also more expensive as many kinds of fee such as the appraisal fee, recording fee, origination fee etc., build up into a large amount.

Choosing the best plan would prove to be beneficial in the long run. Since mortgage plans are long-term plans, they must be chosen with care to avoid any hassles during the tenure. A financial adviser would be able to provide an insight on the pros and cons of a Reverse Mortgage. Also, mortgage lenders provide all the available plans, and some quality negotiations would help the customer get the best Reverse Mortgage deal.

One disadvantage of Reverse Mortgage loans is that they can become very expensive if the homeowner decides to move to a different place within the first five years of the tenure. However, they are very useful for people who have no intention of moving, since the entire amount loaned is tax-free and so can be enjoyed to the full extent.

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