Reverse mortgages, or a home equity conversion mortgage (HECM) are unique loans available to seniors over the age of 62 which allow them to convert the equity in their homes into cash. Seniors are often in need of extra money for expenses such as home improvements, unexpected medical expenses, and in-home care. These loans were developed to provide this much needed cash by taking advantage of home equity seniors have accumulated over the years. If you are looking for a reverse mortgage in Monterey, Hollister, Santa Cruz, Carmel CA, San Jose or the surrounding areas, contact C2 Financial Corp. Steve Mitchell today!
Reverse mortgages get their name because instead of the borrower making monthly payments to their lender as they would with a traditional mortgage, the lender makes payments to the borrower. Once a borrower no longer occupies the home as their primary residence, the loan will need to be repaid.
As seniors ourselves, we understand the varying needs of those who are seeking reverse mortgages. We have the knowledge and expertise to educate local California seniors on the entire reverse mortgage process and requirements. Whether you are in Carmel or one of the surrounding communities, it is our goal to help our fellow seniors and their families understand their options so that they can decide what is best for their individual needs.
Home Equity Conversion Mortgage (HECM)
There is another name for reverse mortgages which is the Home Equity Conversion Mortgage (HECM). A HECM is the Federal Housing Administration’s (FHA) reverse mortgage product which is insured much like the traditional FHA loan. As a HECM is the only reverse mortgage insured by the Federal Government, it is the most widely used reverse mortgage in the United States.
To qualify, a HECM Borrower must
- Be at least 62 years of age
- Own their property outright or have a low mortgage balance
- Occupy the home as their primary residence
- Not be delinquent on any federal debt
- Have the ability to pay ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
- Participate in a reverse mortgage information session given by a HUD approved HECM counselor.
If a borrower meets the above qualifications, lenders will also need to review and verify a borrower’s income, expenses, and credit history. As with all FHA loans, the borrower’s property must meet the FHA’s property standards and flood requirements as well.
Depending on each individual’s needs, a variety of plans are available.
Fixed Rate Mortgages
- Single disbursement lump sum payment
Adjustable Rate Mortgages
- Line of Credit
- Term – equal monthly payments for a set number of months
- Tenure – equal monthly payments as long as one borrower occupies the property
- Modified Tenure – combination of line of credit and tenure options
- Modified Term – combination line of credit and term options
Proprietary Reverse Mortgage
Although not as common as HECM loans, proprietary reverse mortgages may be a valuable option for some seniors. Proprietary Reverse Mortgages are often referred to as Jumbo Reverse Mortgages because they are frequently taken on high-value homes. Rather than being insured by the federal government, typically these loans are privately insured by the lenders offering them. While the rules and regulations that HECM loans must adhere to do not apply to the proprietary loan, as best practice, most lenders will follow the same standards and guidelines.
The reverse mortgage process can seem a bit complicated on the surface, but do not let this frighten you. We are here to help guide you through this process and answer any questions you may have so that you are comfortable from start to finish. Our office is located in Carmel CA, but we work with clients in surrounding areas such as Hollister, Santa Cruz, Monterey, and San Jose, as well as customers across the entire state of California! Contact Steve of C2 Financial today with any reverse mortgage questions you may have!
