Reverse Mortgages

 

Reverse Mortgages in Los Angeles, Santa Barbara, San Diego and all of California

We often say that today’s Reverse Mortgage is not your Daddy’s Reverse Mortgage in that you keep title to your home and your heirs are able to purchase your home for 95% of its  appraised value, even if the accrued interest is far greater than 95% of the appraised value.  Also the line of credit component of a Reverse Mortgage grows and compounds at a very high rate.  Be sure to ask me about this as it’s huge!

What is a reverse mortgage?

A reverse mortgage is a home loan (used for any purpose) where seniors, 62 and older, can access the equity (cash) built up in their home, and we Californian’s know how our equity can grow.

There are several different reverse mortgage programs. Fannie Mae Home Keeper®, and the HUD-insured Home Equity Conversion Mortgage (HECM) are three such programs. As demand increases, more reverse mortgage programs from different organizations will become available.

It is called a reverse mortgage because you borrow money from a lender, but the lender makes monthly payments to you, rather than you making monthly payments to the lender. All interest is paid at the end of the loan, rather than in the beginning.

The maximum single family residence value for Reverse Mortgage purposes for 2018, is $679,650.

What are some of the benefits of a reverse mortgage?

  • Strengthen your personal and financial independence.
  • Help pay for health care or other needs.
  • You can never lose your home in foreclosure as long as you maintain the property tax and insurance payments.
  • The loan is only paid off when the house is sold by you or your heirs, or all borrowers move out of the house.
  • Keep your Medicare or Social Security benefits.
  • Use it as a credit line, which increases in size every year (be sure to ask me about this) and draw upon it as needed.
  • Get all your cash right away.
  • Get the best of both—get cash now and have a balance in reserve to use as a credit line.
  • No Income Requirements: The homeowner does not need to be working and is not qualified based on income.

As the homeowner receives monthly cash income, the loan balance increases. In the following twelve-month example, the homeowner begins with a debt-free home. As money is received by the homeowner, the mortgage grows. By the end of month twelve, the homeowner owes the bank $6,000 plus $232.44 interest. All Reverse Mortgage loans have a variable rate.

Assumptions*

Regular monthly advances $500
Annual interest rate 7.0 %
Monthly interest rate .583% (.07 / 12)
Month Beginning Balance Interest Ending Balance Cash Disbursement
0 0 0.00 0.00 $500.00
1 $500.00 $2.92 $502.92 $500.00
2 $1,002.92 $5.85 $1,008.77 $500.00
3 $1,508.77 $8.80 $1,517.57 $500.00
4 $2,017.57 $11.77 $2,029.34 $500.00
5 $2,529.34 $14.75 $2,544.09 $500.00
6 $3,044.09 $17.76 $3,061.85 $500.00
7 $3,561.85 $20.78 $3,582.63 $500.00
8 $4,082.63 $23.82 $4,106.44 $500.00
9 $4,606.44 $26.87 $4,633.31 $500.00
10 $5,133.31 $29.94 $5,163.26 $500.00
11 $5,663.26 $33.04 $5,696.29 $500.00
12 $6,196.29 $36.15 $6,232.44 $500.00

*Many criteria are considered when determining the reverse mortgage loan amount, interest rate, etc.