Which Reverse Mortgage Option Is Best for Your Needs?
As the name implies, a reverse mortgage works differently than traditional loans. With traditional loans, you pay monthly payments to your lender. On the other hand, a reverse mortgage pays you either in a lump sum or monthly installments.
Sounds interesting? You can ask a Paso Robles mortgage broker for more details.
If you are 62 years or older, there are times when you need extra funds for healthcare or to pay off your current mortgage.
When your reverse mortgage gets approved, repayment only happens when you die, move or sell your home.
Let’s look at the different options available for California homeowners.
What are the types of reverse mortgages available?
Seniors now have the option to choose between a loan that is government insured or one that comes from a private lender.
No matter which you choose, our loan officers are ready to assist you with all your reverse mortgage needs in Paso Robles and throughout the state.
Single Purpose Reverse Mortgage
A single-purpose reverse mortgage may be a good option for funding your retirement. To qualify, you must have a specific purpose, like medical bills, home renovations, or tax payments.
If you often find that you are short funds to meet your medical expenses, a single-purpose reverse mortgage is a good idea since you have a specific need to address.
Applying is similar to traditional loans, which take 30 to 45 days to close. Remember that you will need to declare how you intend to use the loan when you apply.
(HECM) Home Equity Conversion Mortgage
One of the more popular types of reverse mortgages is the federally insured Home Equity Conversion Mortgage or HECM. This loan is backed by the U.S. Department of Housing and Urban Development and is only available from an FHA-approved lender like Accelerated Lending Group.
Unlike the Single Purpose Reverse Mortgage, you can use the funds from your HECM for any purpose you may have.
Loan applicants must attend a counseling session where a professional counselor evaluates their ability to repay the loan.
You can choose an adjustable or fixed-rate loan for your HECM.
Under the HECM Program, you can also find a HECM for Purchase. This program is designed for seniors who are looking to buy a home. Application requirements are similar to the standard HECM but your new home needs to meet some added requirements.
The HECM for Purchase program is helpful for seniors who want to live near family or those looking to downsize. Seniors also need new homes designed to help with physical needs related to aging, like houses without stairs, ones with wider entrances, and those with handrails and ramps, to name a few.
Another advantage seniors can get from the HECM for Purchase program is paying for one set of closing costs compared to paying for two if a borrower bought a home and separately applied for a reverse mortgage.
Proprietary Reverse Mortgage
Also known as a jumbo reverse mortgage, this type of loan is funded through a private company and allows you to set the terms. If you have a high-value home, you may be able to get more with a proprietary reverse mortgage.
If you apply for a HECM, there’s a lending limit of $970,800 for 2022. If you need more than what the loan limit provides, a proprietary reverse mortgage may work better for you.
Reverse Mortage Refinance
A reverse mortgage refinance is an option for seniors with an existing reverse mortgage. Refinancing is good if you want to take advantage of lower interest rates or gain access to more funds as your home equity rises.
If you have a HECM, you can refinance to another HECM, taking into consideration the amount of equity left in your home.
If you need advice on what type of reverse loan by Accelerated Lending Group is best for you, contact us. Our loan experts will recommend a loan product that would fit your specific needs.
Do you need help with your reverse mortgage plans?
Navigating your retirement plans can be a tricky process. Working with a trusted lender can help you find the best solution given your circumstances. If you think that a reverse mortgage is a good option for you, choosing what’s the best fit is essential.
Get in touch with our loan specialists for a free consultation. At Accelerated Lending Group of Paso Robles, CA, we will take the time and recommend the best option that will work for you.
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.