Marin County Real Estate Blog

Understanding the Reverse Mortgage

What is a Reverse Mortgage?As home owners approach retirement, they may be concerned about not having enough money to cover their living expenses on a fixed income. You may have heard of a reverse mortgage as a way to supplement your income, without having to sell your home and downsize.

This guide shows you the details surrounding a reverse mortgage, and how to determine if it is the right choice for you.

What is a Reverse Mortgage?

When you get a traditional mortgage, you borrow a certain amount of money from a bank to finance or refinance a home, and then make monthly mortgage payments with interest. With a reverse mortgage, also known as a Home Equity Conversion Mortgage, you use the home’s equity to get a loan from the lender.

The lender makes payments to you at a specified interval, which can range from a lump sum at closing to fixed monthly payments for the rest of your life, depending on the loan terms. As long as you fulfill the requirements of the loan, you are not required to leave the home. Some people consider a reverse mortgage to be an effective way to supplement their income in retirement.

Who Can Qualify for a Reverse Mortgage?

There are a few simple qualifications you have to meet in order to be able to get a reverse mortgage. Applicants must:

  • Be at least 62 years old
  • Maintain the home (or a unit in a 2-4-unit dwelling) as a primary residence
  • ...

The Pros and Cons of Buying a New Construction Home

Home Under ConstructionIf costs were the same, 40 percent of Americans would prefer a new construction home over a pre-existing home. That is compared to 21 percent who would opt for an established home and 39 percent with no preference.

However, fewer than half of those who strongly prefer a newly built house are willing to fork over the additional 20 percent that new builds bring on average. Why is that? Although the newness is enticing, it doesn't single-handedly carry the luster during the home-buying experience.

While shiny and new has its allure, what's actually behind these home buyers' preferences? The following points look at some of the perks and pitfalls of purchasing newly built homes.

Pros of New Construction Homes

  • Customization is a huge benefit. If you make the purchase early enough in the building process, builders may allow you to personalize the home according to your preferences. This means that countertops, flooring, cabinets and colors could be yours to choose.
  • Contemporary style and design is another big-ticket advantage to new construction. Today's modern lifestyle often demands the open floor plan concept, which includes large rooms that flow into the kitchen and eating areas. Older homes tend to have compartmentalized rooms with both a formal dining room and formal living room, whereas newer homes reflect a more unified ambiance. Likewise, new builds often have large master baths, walk-in closets, and eat-in kitchens, which busy people tend to prefer.
  • Little maintenance...

The True Costs of Buying a Home

Paying Money for HomeBuying a home is a serious financial commitment. The home itself will, of course, cost tens or hundreds of thousands outright. But a lot of other costs can really add up when buying a home, and prospective homeowners should consider all of them before deciding what they can reasonably afford.

Costs of Mortgages

Mortgages are a way of making highly unaffordable home prices more affordable through a loan and monthly payments. However, banks are not charities. They want to make money off the exchange in the form of interest.

Over the life span of the mortgage, these interest payments will costs tens of thousands of dollars or even more. You can't simply divide the cost of the house by the number of monthly payments to know what you'll owe every month. That will produce a dangerously underestimated price tag.

Down Payments and Points

In addition to correctly estimating a monthly payment, you also need to know your initial payment, which will be far higher. Down payments of up to 20% of the price of the home may be required up front.

There are benefits to down payments; everything you can pay now means less principal to accrue interest. In the long run, large down payments may be a good thing, but it can be difficult to put down such a large amount of money and leave enough left over to cover other expenses in your life. Many opt to keep a certain amount away as an emergency fund to make sure they are not spreading...