In-depth: Mortgage options for Bay Area senior citizens

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If it does not all go according to your plan, the golden years can feel like the Twilight Zone.

On Wednesday, KRON4 spoke with housing industry experts with a look at mortgages and the options available out there for the senior population.

It’s an issue that is complex and often too difficult for many of us to understand.

“I think anything can be risky if not well-understood,” Mortgage Consultant Chris Hudson said.

The federal government’s Consumer Financial Protection Bureau recommends considerable consultation with a financial expert before jumping into a reverse mortgage

“I try to facilitate an experience opposite of a surprise birthday party,” Hudson said.

Hudson, with C2 Financial, says this type of loan is only available to the older population.

“A reverse mortgage is just that–it’s when we’re now monetizing equity in our home, either in a lump sum or on a, on a monthly basis, if you will,” Hudson said. “You can kind of think of it like an annuity.”

This form of a loan is tailored for people 62 years old and older, looking to buy a home or already have a home and need another stream of income.

“It’s just like what it says, instead of me paying the bank, the bank is paying me…out on an ongoing basis,” Hudson said.

The interest rate on a reverse mortgage fluctuates based on the market and can sometimes be much higher than a traditional mortgage.

It is interest that also compounds over the term of the loan, eventually leading some borrowers to see the loan exceed the actual value of the home.

“They’ve come to a point in their lives where they’re not retired, but they don’t necessarily have enough income coming in to kind of help all their basic monthly expenses on a monthly basis,” Hudson said.

The Federal Trade Commission says borrowers cannot escape paying homeowner’s insurance or property taxes with a reverse mortgage.

Though the money the borrower receives is typically tax-free, this continues until the borrower sells the home, moves out, or dies.

In theory, the FTC says the loan is then repaid with the sale of the house, meaning fewer assets to leave behind to your heirs.

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