Reverse Mortgage in
Marina Del Rey, California

 

A Home Equity Conversion Mortgage (HECM, a type of reverse mortgage) in Marina Del Rey can be very beneficial for you if you need additional income during your retirement. Because it’s a loan, it is tax-free and doesn’t affect your Medicare eligibility, though it can affect Medicaid eligibility. Talk with your lender about setting up monthly payments that don’t put you above the Medicaid income threshold. Other payout options include a line of credit, a lump sum, or any combination of options.

Another advantage of a reverse mortgage is to partly finance the purchase of a new home without using all the proceeds from selling your current home.

But just like with any other financial decision, a reverse mortgage has its pros and cons, and you ought to know the costs before you dive in. A reverse mortgage has several different fees and other costs associated with it, so you’ll want to make sure those costs don’t outweigh the benefits for you.

Interest Costs

Probably the biggest cost of a reverse mortgage loan is interest. The costs that build up through reverse mortgage rates are similar to those of a traditional mortgage. Over the life of the loan, interest accrues on the money you borrow. The difference, however, is in how you pay the interest. With a traditional mortgage, you owe your lender an interest payment every month. But with a reverse mortgage, you (or your heirs) pay all of the interest of the loan at the end.

There are several ways to minimize your interest cost. One way is to get a loan when reverse mortgage rates are low. The lower the rate, the less money you’ll owe at the end of the loan. Another method is to keep the amount you borrow to a minimum. With less money to accrue interest, you won’t owe as much at the end of the loan.

Origination Fee

The origination fee goes to the reverse mortgage lenders to cover the costs of processing the loan. The amount you will have to pay for this fee varies, as it depends on the value of your home and the loan program you are using. The origination fee typically can be as low as $2,500, with a hard cap at $6,000.

Mortgage Insurance Premiums

Mortgage Insurance Premiums (MIPs) are required by the FHA so reverse mortgage lenders can recoup any losses in the event of a default, or if the home ends up being worth less than the value of the loan. There is an upfront MIP, due at closing, as well as an monthly MIP for the life of the loan. The upfront MIP amount depends on the amount borrowed, while the monthly MIP is a fixed .50% of the loan balance.

A jumbo reverse mortgage is not insured by the Federal Housing Administration, so MIPs are  not required for that kind of loan. Jumbos are designed for high-value homes, typically above $1.2 million, so that owners can borrow above the FHA’s lending limit of $679,650.

Third-Party Fees

Third-party fees, including appraisal, inspection, and title, cover all of the other closing costs of the loan. These fees are similar to those associated with a traditional mortgage. A reverse mortgage calculator can help you figure out these and other fees.

Servicing Fees

Servicing fees are required only for jumbo reverse mortgages. For any jumbo reverse mortgage with a fixed interest rate, a flat fee of $25-$30 is added to the loan balance every month.

Are you ready to take advantage of the benefits of a reverse mortgage in Marina Del Rey? Apply today to get started on your loan.