Californians who are hitting retirement age are finding that it is
possible to fund luxury retirements with the equity from their homes.
Most California homes that were bought in the 1960’s for moderate
prices now have home equity well into the six figure range. Retirees
who are at least 62 years old and have their homes paid off are eligible
to take out reverse mortgages on their homes.
When reverse mortgages were
first invented they were regarded almost as a last resort step to avoid
foreclosure or to pay medical expenses. Currently only 1% of mortgage
loans in California are reverse mortgages, but the use of reverse mortgages
to fund fun and exciting retirements seems to be growing. California
interest rates are currently very low so the trend is certain to continue
in the future.
The way California reverse mortgages work is easy. Owners of paid off
homes who are at least 62 years of age can borrow against the equity
in their homes in the form of a lump sum, a line
of credit, or in the form of monthly payments. The loan is repaid
when the owners die or when the home is sold or no longer occupied.
With the sort of money that reverse mortgages offer, homeowners can
use their equity to buy recreational vehicles, boats, luxury vacations,
and even second
homes. The way reverse mortgages are set up makes it possible for
homeowners to be able to pay cash for a vacation home, while continuing
to live in their primary residence for as long as they like, or are
able. Once they die, the primary residence is usually sold to pay back
the loan, while the second home would become part of their estate.
What better way to spend your retirement than by living off of your
home’s equity?