How Obtaining A Reverse Mortgage In California Can Keep You On Budget

If you are struggling to make ends meet or you would just like some extra money in

the bank at the end of the month, it may be time to take a closer look at your budget. If you continuously go over your budget month after month, it may time to make some changes. One option may be obtaining a reverse mortgage. If you are in the state of California, you may able to eliminate your monthly loan payments or cash into your existing equity to help you stay on budget. There are some requirements you may have to meet to obtain a reverse mortgage in California.

When reviewing the details of your budget, some of the first things you may have to eliminate or find better rates on is your non-necessities such as cell phone bills, cable bills and gym memberships. If you call and speak to a customer service representative and tell them you need to lower your bill, they may be able to help adjust the current plan you are on or extend your contract under a new plan with lower rates, the result is a lower overall payment. After refinancing your credit cards, auto loan and trying to re-consolidate some of your bills, you will need to look at your mortgage. Depending on how much you owe and how much equity is in your home, you may qualify for a reverse mortgage.

A reverse mortgage is a program that creates a new mortgage on your existing home and allows you to convert the equity you have into your home into tax-free cash. Unlike a traditional refinance or second mortgage, you do not have to take out an additional loan on your home. There are no monthly payments or revolving installments. The lender will make a lump-sum payment to you and this amount depends on a few different factors such as your age, the age of your spouse, appraised home value, the amount of your existing mortgage or lien and the lending limit for reverse mortgages in your area. The older you are, the less you owe on your mortgage and the higher the appraised value of your home, the more cash back you will receive. Keep in mind there are loan processing fees and additional fees such as appraisal fees that will be deducted from the lump-sum at closing.

In order to obtain a reverse mortgage in California you will have to meet certain criteria before you are accepted. You have to be at least 62 years of age in most states, including California, to qualify. When you meet with a reverse mortgage specialist, he will go over the details of the program and examine your latest home appraisal. Single-family homes, certain manufactured homes, condominiums and townhouses are some of the home types that qualify. You can also choose how you want to receive the money from your reverse mortgage. You can receive it all at once, as a line of credit to help build or maintain credit, or as fixed monthly payments that are paid to you as long as you live in and continue to maintain the home.

The main benefit about obtaining a reverse mortgage is that you can choose whatever you want to do with the proceeds. You can put the money into home repairs, pay off debt, go on vacation or save the money for retirement or pleasure. Having the extra cash each month will help you pay off debt faster.

There are several benefits a reverse mortgage has on your monthly budget. The biggest advantage is you can use the equity in your home to help maintain an adequate budget and keep your finances on track.

by: Jordan McPelt

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