Team Sleder has been working with seniors and Reverse Mortgages in San Diego and throughout California for the past 16 years. As a San Diego Mortgage Broker and banker we have several Reverse Mortgage sources to make sure the borrower has the best options. Below is an overview of all the different types of Reverse Mortgages.
HECM – Home Equity Conversion Mortgage – San Diego
HECM refers to a reverse mortgage insured by HUD and FHA. The majority of reverse mortgages issued are HECMs. There are Jumbo Reverse Mortgages for higher valued homes and those are discussed below as well. The FHA’s HECM program contains special requirements like HUD counseling and a property value ceiling. The HECM property value ceiling is currently at $970,800 for San Diego County. This means that if the home is appraised for more, the loan amount will be based on the $970,800K value.
There are currently two different types of HECM reverse mortgages offered in San Diego and nationally. Each offers either a fixed rate option or an adjustable option. The two programs along with the differences between the fixed and adjustable options are explained in more detail below.
Fixed Rate Reverse Mortgage – San Diego
The fixed rate HECM Reverse Mortgage eliminates the risk of adjustable-rate mortgages. With the HECM Fixed Rate loan, the borrower has the comfort of knowing exactly what their interest rate will be for the life of the loan and the certainty that the rate will never increase. In addition, since the interest accrual is known, borrowers will have the comfort of knowing exactly how much they may pass on to their estate. Borrowers must take a full draw at closing.
Adjustable Rate Reverse Mortgage – San Diego
Adjustable rate reverse mortgages have by far been the most popular reverse mortgage loan to date. They are based off of two indices; Treasury Index (CMT) and LIBOR Index. The adjustable option allows the funds available to be paid out as a lump sum, line of credit, tenure payment, or any combination.
Purchase Reverse Mortgage – San Diego
Beginning January 1, 2009, FHA began insuring reverse mortgage loans for Seniors to purchase homes. This program will allow Seniors to leverage their cash and buy their San Diego retirement home. A reverse mortgage does not have required monthly mortgage payments like traditional mortgages and reverse mortgages are based on appraised value and the borrower’s age, not credit or income. The older you are, the more you will qualify for.
Reverse Mortgage Refinance – San Diego
A reverse mortgage can also be used to refinance an already established reverse mortgage in the future. As the property value increases and the borrower gets older, there is a potential that more funds will be available. An adjustable rate reverse mortgage can also be refinanced in a fixed rate reverse mortgage.
Jumbo Proprietary Reverse Mortgages
Jumbo reverse mortgages allow homeowners with higher valued homes to access a larger portion of their equity or purchase a higher valued home. This program does not have the home value limit that the FHA HECM program does. The jumbo reverse mortgage can also be used on non-FHA approved condos and carry lower closing costs because they do not have mortgage insurance. Yet, they have all the same safety features of the HECM and come in Fixed or Adjustable rate options with a line of credit. Jumbo reverse mortgages can also be used as early as age 55.