Are Reverse Mortgages Your Golden Egg ?

With our economic system in a tailspin, for the older generation hit the hardest by their declining fortunes, coupled with the rise of unemployment, decline in property values and retirement investments all but out the window,there may be yet another way for them to tap into the greater amount of their home equity in these hard times. I sure do know that in our San Diego real estate market, the impact has been horrific. But maybe their is yet another Golden Egg to discover.

For home owners that are age 62 or older and have a good amount of equity, Reverse Mortgages may be their Golden Egg that helps them through the tough times and ensures they can stay in their homes.

While there are scores of Reverse Mortgage offerings out there from  private companies and even some state and local government types, the federally insured Home Equity Conversion Mortgage might be a good place to start in the discovery of the costs and requirements to see if the idea of a Reverse Mortgage is your Golden Egg.

An FHA Reverse Mortgage, was granted a higher loan limit last fall that currently stands at $417,000. 

Some of the options of the reverse mortgage is that it can give these older home owners various ways to take the loan. It can be an equity line of credit, lump sum payment or a combination of both, all the while they can remain in the home without the burden of making mortgage payments. And the costs and types of loans will most likely vary greatly.

Below is a general overview of the requirements for an FHA approved reverse mortgage, fully guaranteed by the federal government ( Federal Housing Administration, Housing and Urban Development, Department of Veteran affairs).

Requirements:

1. Must be 62 years of age or older
2. Property must be your principle residence
3. Agree to be counseled by Home Equity Mortgage Counselor*
4. Have enough Equity in the residence

The Amount of Mortgage is Based upon:

1. Age of youngest borrower ( must be at least 62 years old )
2. Either the appraised value or Home Equity Conversion Mortgage FHA mortgage limit ( whichever is less)
3. Current mortgage interest rates

Financial Qualifications:

1. There is no income or credit evaluations needed of the borrower (s)
2. Costs associated with the Reverse Mortgage may be a part of the financing
3. No repayment is required unless residence is sold , residence changes from being primary residence or borrower passes away.

Eligible Property Requirements:

1. Property must meet the minimum FHA property standards.
2. Must be a single family home or 1–4 unit home with one unit occupied by the owner as the principle residence.
3. If property is a condominium, must be on the approved FHA list.
4. If the property is a manufactured home, it must meet minimum FHA requirements for Manufactured Homes.

1. *The purpose for the counseling is to determine if eligibility requirements can be met, what the financial implications and alternatives would be for the reverse mortgage and also what kinds of costs are involved. At that time, the provisions of the mortgage are presented with what circumstances will trigger the mortgage to become due and payable. After the counseling session, the Borrower(s) will be best able to make the determination if the reverse mortgage would be of benefit and ultimately meet the needs.

When the Voice of San Diego Real Estate speaks, consumers can learn and be benefited with a better understanding of San Diego Real Estate market and the greater San Diego community.