Reverse Mortgages in
Santa Clara County, California
Is a Reverse Mortgage in Santa Clara County Right for Me?
A reverse mortgage in Santa Clara County might be the right solution for you if you need more cash in retirement, want to finish paying off your home, could use the money to repair and/or improve your home, need money for increased expenses such as health care, or for other necessities. It’s not recommended to pull out your equity for something frivolous, because of the fees involved, and you’ll have to repay it eventually.
What are the Pros and Cons of Getting a Reverse Mortgage in Santa Clara County?
A Home Equity Conversion Mortgage (HECM) taps into unused equity locked up in your home. This government-backed mortgage provides income in regular payments, a lump sum, or a line of credit up to the lending limit of $679,650, or some combination of these three.
On the pro side, a HECM can provide income in your golden years in an uncertain world. And the FHA insurance on a HECM guarantees that you can’t be required to repay more than the value of the house—even if the market value is less than the loan balance.
If you want to sell your home and downsize, a reverse mortgage for purchase can allow you to finance part of the cost of the new home without using all the proceeds from the sale for the new home, keeping those funds available for other uses.
On the con side, by converting your equity to cash a HECM reduces the equity you can pass on to heirs. It must be repaid once you sell your home if you pass away, or it stops being the primary residence of at least one qualified borrower. So if your spouse dies and you end up in a care facility for more than 364 days, the loan could fall due.
Your heirs have the option of refinancing or buying at 95% fair market value if they want to retain the home.
What is the Difference Between a HECM and a Jumbo Reverse Mortgage?
What if your home is worth more than the FHA’s lending limit of $679,650? Borrowers in Santa Clara County may qualify for a jumbo reverse mortgage that can be used on a primary residence of up to $12,000,000, or more. Jumbo lending limits tend to top out around $6,000,000
Jumbo reverse mortgages are not backed by the FHA. However, both are non-recourse loans, which means that you can never owe more than the value of your home. The FHA charges an upfront Mortgage Insurance Premium for this whereas the Jumbo does not charge anything.
Understanding Reverse Mortgage Rates in Santa Clara County
The interest rates in Santa Clara County vary based on the type of reverse mortgage (HECM or Jumbo), age, zip code, and other factors you’ll see on your application. Reverse Mortgage Alert maintains a table showing average fixed and variable rates in California from Jan. 1, 2015 to two months before the current month.
With a HECM, the lower the interest rate, the greater the proceeds. It is opposite with a Jumbo. With a Jumbo, the higher the rate, the more proceeds that are loaned.
The variable rates start at a lower level and fluctuate with various market factors. The fixed rate is higher but doesn’t change. A reverse mortgage calculator can take these averages to help give you some idea of what you’d be looking at, but if you really want a clear picture, you can’t do better than contacting the experts at Trinity Reverse Mortgage.
The Costs and Benefits of Getting a Reverse Mortgage in Santa Clara County
Lenders charge reasonable fees for loan origination, closing, and insurance (HECM Only), which can all be added to the loan balance, requiring very little from the borrower upfront—mostly the cost of the appraisal.
The cost of an appraisal for a jumbo loan can be higher for an expensive home, and jumbos carry a servicing fee that is rolled into the loan balance. Jumbo reverse mortgages don’t require the insurance fees of a HECM loan.
The costs and interest can be paid by the sale of the home after your death, or through other means. As long as you pay your property taxes and insurance, maintain the home as your primary residence, and keep the property in good condition, you may stay in your home for the rest of your life without the loan coming due! As long as you are responsible with your money, a reverse mortgage should be a good way to use your equity that otherwise would be locked up in your home.