What is a reverse mortgage?

A reverse mortgage is a type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you have acquired over years of making mortgage payments can be paid to you.  However, unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.  Also, you are able to use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

Can I qualify for FHA’s HECM reverse mortgage San Diego?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, have the financial resources to pay ongoing property charges including taxes and insurance, and you must live in the home. Also, you are required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan. You can find a HECM counselor online or by calling (800) 569-4287.

Can I apply for a HECM even if I did not buy my present house with FHA mortgage insurance?

Yes. You can apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage.

What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also qualified.

What are the differences between a reverse mortgage and a home equity loan?

With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest.  A reverse mortgage San Diego is unlike that because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage San Diego, it is required to pay real estate taxes, utilities, and hazard and flood insurance premiums.

Will we have an estate that we can leave to heirs?

When the home is sold or no longer in use as a primary residence, the cash, interest, and other HECM finance charges must be repaid.  All proceeds beyond the amount owed belong to your spouse or estate. Therefore, any remaining equity can be transferred to heirs. No debt is passed along to the estate or heirs.

How much money can I get from my home?

The amount varies by borrower and depends on:
• Age of the youngest borrower or non-borrowing spouse
• Current interest rate
• Lesser of appraised value or the HECM FHA mortgage limit of $625,500 or the sales price
• Initial Mortgage Insurance Premium
• If there is more than one borrower, the age of the youngest borrower is used to determine the amount you can borrow.

Should I use an estate planning service to find a reverse mortgage San Diego lender?

FHA does not recommend using any service that charges a fee for referring a borrower to an FHA-approved lender. You can locate a FHA-approved lender by searching online at www.hud.gov or by contacting a HECM counselor for a listing. Services rendered by HECM counselors are free or at a low cost. To locate a HECM counselor Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.

How do I receive my payments?

For adjustable interest rate mortgages, you can select one of the following payment plans:
• Tenure- which are equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term- equal monthly payments for a fixed period of months selected.
• Line of Credit- unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted.
• Modified Tenure- a combination of line of credit and scheduled monthly payments for as long as you remain in the home.
• Modified Term- a combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.  For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.
• Single Disbursement Lump Sum – a single lump sum disbursement at mortgage closing.

What if I change my mind and no longer want the loan after I go to closing?  How do I do this?

By law, you have three calendar days to cancel the loan. This is known as three day right of rescission.  The process of canceling the loan should be explained at loan closing.  Be sure to ask the lender for instructions on this process.  Mortgage lenders differ in the process of canceling a loan. It is recommended to ask for the names of the appropriate people, phone numbers, fax numbers, addresses, or written instructions on whatever process the company has in place.  In most cases, the right of rescission will not be applicable to HECM for purchase transactions.

Please call San Diego Mortgage & Realty to see if a reverse mortgage San Diego, CA is right for you: (858) 487-2208.