Reverse Mortgage in
By now, you’ve probably heard your friends and family talk about reverse mortgages. A reverse mortgage is a great way for older homeowners to take advantage of their home’s equity now. Here are a few ways Trinity Reverse Mortgage can help you achieve your financial goals.
A Quick Look at Reverse Mortgage in Temecula
A home equity conversion mortgage (HECM), or reverse mortgage, is a government-backed loan that allows homeowners who are at least 62 years old, own their home and reside in their home, to borrow against the home’s equity. Unlike traditional home equity loans or second mortgages, a reverse mortgage doesn’t have to be paid back until the borrower no longer resides in the house, the borrower dies and there is no eligible spouse, or the borrower fails to meet the obligations associated with the mortgage.
Is a HECM Reverse Mortgage the Right Type of Loan for You?
A reverse mortgage isn’t for everyone and HUD and FHA have strict borrower requirements that must be met before the loan can be finalized. These requirements include:
- Age requirements
- Primary lien requirements
- Occupancy requirements
- Taxes and insurance
- Maintaining the property in good condition
What is the difference between a HECM and a Jumbo Reverse Mortgage?
A HECM Reverse Mortgage, insured by the FHA, allows older homeowners who meet the requirements to convert a portion of the equity in their home to cash. The lending limit increased to $679,650 on 1-1-2018. Many people use it to supplement their income. Instead of paying the loan back like a traditional mortgage, the money is repaid when the homeowner dies or no longer lives in the home.
A variant on the HECM is the reverse mortgage for purchase. This loan is used to upgrade or downsize to a new home. A HECM for purchase can be a good way to buy a new home without using up all your cash from selling your old home, thus preserving your assets for other uses.
A jumbo reverse mortgage is a non-government-backed mortgage, not insured by the FHA. This means borrowers can borrow more than the FHA’s upper lending limit of $679,650. It works particularly well for homes valued above $1.2 million and older borrowers, typically in their 70s. Jumbo reverse mortgages work well for condos too. They do not need to be FHA approved condo associations and loans are available for condos values starting at $500,000 up to $6,000,000.
What are the costs and fees associated with a reverse mortgage?
Costs associated with a reverse mortgage can include:
- Loan origination fee – This fee covers the lender’s costs of processing the reverse mortgage. This fee is capped by HUD at $6,000.
- Appraisal – An appraisal is standard in most types of mortgages to make sure the value of the home is accurate. Although appraisal costs can vary, you can generally plan to spend around $550.
- Closing costs and third-party services – Title searches, title insurance, land surveys, and credit check fees are just a few of the additional expenses you might encounter during your mortgage.
- Mortgage insurance premium – This FHA insurance protects both the borrowers and the lenders. Reverse mortgage borrowers cannot be required to repay more than the value of their home, so if the home’s value falls below the amount of the mortgage this insurance will pay the lender the difference.
A reverse mortgage is a great option for older homeowners who want to use the equity in their home during their golden years. It can seem complicated but that’s where Trinity Reverse Mortgage comes in. Let us show you how easy applying for a reverse mortgage can be.