Can you get a reverse mortgage if your home isn’t paid off?
YES!
There are many reverse mortgage facts that people either assume they know or don’t know and this is one of them.
Before a HECM reverse mortgage or non-HECM mortgage borrower can use of any reverse mortgage funds, the existing mortgages on the property must first be paid off before any residual funds can be used by the borrower.
Sometimes there’s just enough room to pay off the mortgages with a reverse mortgage and there’s no money left for the homeowner to use at their discretion.
So why would a homeowner aged 55 or older consider a reverse mortgage if they don’t any funds to use?
The answer is they no longer have to make a mortgage payment anymore since reverse mortgages don’t require a monthly payment mortgage payment to be paid back.
It isn’t a free ride, the interest and insurance (if applicable) that doesn’t get paid on a monthly basis gets added to the balance over time, meaning the mortgage balance will rise over time.
Not having a mortgage payment can free up cash flow, improve the quality of someone’s life and be quite liberating, but may not be for everyone.
I made a quick one-minute video that sheds more light on this issue, please click below to watch it.
https://youtube.com/shorts/kFfD-flI-c4
If you have any question on this subject or want to know more about how California reverse mortgages work, feel free to call, email or leave your scenario on the form below.
Kind regards,
KW