Reverse Mortgages California

Bank of America has announced that it will no longer accept reverse mortgage applications containing a broker advisor agreement in response to the new law called the National Housing Act (HR 3221). I suspect that other reverse mortgage lenders are likely to interpret the new law in the same way and follow suit. This means that non-FHA approved brokers will no longer be able to receive the common 25% "application assistance fee" (read: referral fee) on the FHA reverse mortgage.

The good news is that this same bill will increase the FHA 203(B) (HECM reverse mortgage) lending limit. This means that senior homeowners, whose homes are currently worth more than the lending limit for their area, will likely see an increase in the amount of money available to them under the FHA HECM reverse mortgage. The specific increases for each county are still under review with HUD.

Luke
Senior Reverse Mortgages

Rates are still very low on the government-backed FHA reverse mortgage.

FHA Reverse Mortgage - Home Equity Conversion Mortgage (HECM)
3.71% based on the One Year CMT index plus a margin of 1.5%.
The fixed rate HECM is at 6.18% to 6.85%

Jumbo Reverse Mortgages:
Variable Rate Jumbo Reverse Mortgage: 5.96%
Fixed Rate Jumbo Reverse Mortgage: 9.125%

Fannie Mae Home Keeper Reverse Mortgage is at 5.875%

Disclaimer: Of course, interest rates do not include closing costs which vary. A reverse mortgage quote will provide the details like closing costs and the Total Annual Loan Cost. I specialize in California Reverse Mortgages.

Seniors with high value homes may qualify for more money with a Jumbo Reverse Mortgage program. The two main types of reverse mortgages are: FHA conforming and non-conforming, the latter commonly known as a Jumbo Reverse Mortgage. An FHA conforming reverse mortgage carries a loan limit of $362,790 in most high-cost counties (although it can vary), whereas a Jumbo Reverse Mortgages generally have loan limits in the millions.  An FHA conforming loan limit is the maximum amount of home value that the FHA will recognize in calculating the amount of money that they will lend on the home.  Therefore, Jumbos are considered by senior homeowners when the value of their home exceeds the FHA conforming loan limit because they can obtain a larger loan this way.

Jumbo Versus Conforming

Although the Jumbo does not have a loan limit, the FHA reverse mortgage (known as the Home Equity Conversion Mortgage or HECM) offers a much greater percentage of the home's first $362,790 in value.  This means that the Conforming reverse mortgage is still the better choice until the home value far exceeds the FHA conforming limit.  But if a home's value exceeds the loan limit by a significant amount, the Jumbo can usually offer a larger amount of money.  Seniors with high home values- those exceeding the $362,790 limit (or the FHA HECM limit for their county) should definitely explore all of their options.

For Example

A 70 year old with a home that is worth $400,000 in Orange County, California might qualify for $225,000 under the FHA reverse mortgage, while the Jumbo program would only offer $160,000. This shows how Jumbo Reverse Mortgages are much more conservative in the percentage of the value of the home that they will offer. But when the home value is very high, this more conservative lending percentage (known in the industry as "loan-to-value" ratio) will overtake the FHA reverse mortgage. If the 72 year olds home is worth $700,000 for example, then they might qualify for $280,000, which is $55,000 more than the FHA reverse mortgage would offer.

When a Jumbo Reverse Mortgage Makes Sense

Once home value is above the conforming loan limit for the county, the amount of money available under the Jumbo Reverse Mortgage increases, while the FHA program does not change. As a general rule, Jumbos begin to make financial sense when the home is worth at least $200,000 more than the FHA reverse mortgage limit for the county, but there are exceptions for both higher and lower values.

Get a Quote

The loan scenarios above are not an offer to lend and are intended only to illustrate the potential differences between the Jumbo Reverse Mortgage and the FHA reverse mortgage.  The examples given may not apply to your particular circumstances.  I suggest that you request an FHA or Jumbo Reverse Mortgage quote.

Luke
External Blog: http://reversemortgagescalifornia.activerain.com/

Here are reverse mortgage interest rates for July 15th, 2008.

Jumbo Reverse Mortgages:
Variable Rate Jumbo Reverse Mortgage: 5.97%
Fixed Rate Jumbo Reverse Mortgage: 8.750%

FHA Reverse Mortgage - Home Equity Conversion Mortgage (HECM)
3.75% based on the One Year CMT index plus a margin of 1.5%.
The fixed rate HECM is at 6.18% to 6.45% (depending on the bank)

Fannie Mae Home Keeper Reverse Mortgage is at 5.875%

Luke
New external blog: http://reversemortgagescalifornia.activerain.com/

Disclaimer: Interest rates do not include closing costs which vary. A reverse mortgage quote will provide the details like closing costs and the Total Annual Loan Cost. I specialize in California Reverse Mortgages.

Reverse mortgage interest rates are down slightly this week. Here they are for  the most common reverse mortgage programs.

Home Equity Conversion Mortgage (HECM) FHA Reverse Mortgage:
The HECM rate is down this week to 3.85%. Index is the One Year CMT index plus a margin of 1.5%.
The fixed rate HECM is at 6.18% to 6.60% (depending on the bank)

Fannie Mae Home Keeper Reverse Mortgage is at 5.875%

Non-FHA Jumbo Reverse Mortgages:
Variable Rate Jumbo Reverse Mortgage: 5.96%
Fixed Rate Jumbo Reverse Mortgage: 8.875%

Luke
New external blog: http://reversemortgagescalifornia.activerain.com/

Disclaimer: Of course, interest rates do not include closing costs which vary. A reverse mortgage quote will provide the details like closing costs and the Total Annual Loan Cost.

Happy Tuesday everyone! That means it's time for my weekly reverse mortgage interest rate update.

Jumbo Reverse Mortgages (Non-FHA):

Variable Rate Jumbo Reverse Mortgage: 5.95%

Fixed Rate Jumbo Reverse Mortgage: 8.750%

Countrywide or Bank of America Jumbo: Suspended for Brokers

Financial Freedom Cash Account Advantage Reverse Mortgage: Suspended

FHA Reverse Mortgages (Home Equity Conversion Mortgage or ‘HECM')

The HECM rate is down this week to 3.96%. This is based on the One Year CMT index plus a margin of 1.5%.

The fixed rate HECM is at 6.43% to 6.92% (depending on the bank)

Fannie Mae Reverse Mortgage

Home Keeper is at 6.0%

Luke Helm
Reverse Mortgage Professional
Reverse Mortgage Info
New outside blog: http://reversemortgagescalifornia.activerain.com/

Disclaimer: Of course, interest rates do not include closing costs which vary. A reverse mortgage quote will provide the details like closing costs and the Total Annual Loan Cost.

From uninsured medical bills, to prescription drugs, to home maintenance and even at home care, social security income alone often cannot cover all of a seniors' expenses.  Many Southern California seniors have found a solution to affording the high cost of living in our region with a Reverse Mortgage. And in addition to helping with daily necessities, some Californians are having a little fun with the money from their reverse mortgage. Many seniors are now using this payment-free home loan to take advantage of their home equity to enjoy a higher standard of living.

Seniors' Home Equity in Southern California

Generally, the longer the senior has owned their home, the better. Southern California Seniors who have owned their home for more than 10 years have probably seen a large increase in their home equity as real estate values have increased.  Despite a declining housing market, most long-term residents of Southern California still have plenty of home equity to support a reverse mortgage. And fortunately for homeowners, the lender (or FHA) assumes the risk of further drops in value once the reverse mortgage is obtained, so further home price depreciation will not affect the loan or amount of money available. This factor makes now an excellent time to apply for a reverse mortgage, before a senior is disqualified for a reverse mortgage due to further declines in home prices.

Reverse Mortgage Options

The average reverse mortgage for seniors in Southern California enables them to tap into over $200,000 of their home equity. And the more equity they have, generally the more reverse mortgage funds are available. Once the loan closes, there are numerous ways of taking the money out: as a lump sum to put in the bank, a line of credit to tap into at any time, an automatic month check or any combination of these options. There is always the option to repay the money early, which in most cases, increases the amount available for the future. Rather than being stuck with the inflexibility of a traditional mortgage, the Southern California senior's reverse mortgage can be customized to meet their specific needs and goals.

Luke Helm
Reverse Mortgage Specialist
New "outside blog" at http://reversemortgagescalifornia.activerain.com/

I just faxed the following letter to Diane Feinstein and Barbara Boxer (California State Senators), concerning a senate bill being debated today:

"Tens of thousands of senior homeowners in California need the FHA-insured HECMs to help them maintain their ability to continue living independently in their own homes. But the FHA loan limits have been far too low for too long and are thus incapable of helping thousands of seniors who live in high-cost areas of the state.

Due to the housing market in California, and lack of jumbo reverse mortgage lenders (Bank of America and Indy Mac Bank have recently suspended their programs), seniors have more debt than the amount they can borrow from a HECM based on today's lower loan limits, so an increase is necessary.

As a reverse mortgage loan officer, I personally know 4 different households who will face foreclosure if the FHA HECM limit is only increased to the proposed $417,000.

The HECM program should be amended to allow senior homeowners to obtain HECMs based upon the same higher loan limit that would be allowed for other FHA loans under the pending legislation.

Please call Sen. Richard Shelby from Alabama, as well as Sen. Chris Dodd, the Democratic chairman of the committee, and tell them we must see a $625,500 maximum loan limit for HECM included in the bill that is brought to the floor."

The following is an interest rate update on reverse mortgage programs.

FHA Reverse Mortgages (Home Equity Conversion Mortgage or ‘HECM')

The HECM rate is at 4.07%. This is based on the One Year CMT index at 2.57% plus a margin of 1.5%.

The fixed rate HECM is at 6.30% to 6.68% (depending on the bank)

Non-FHA Jumbo Reverse Mortgages:

Financial Freedom Cash Account Advantage Reverse Mortgage: Suspended

Bank of America / Countrywide Jumbo: Suspended

Fixed Rate Jumbo Reverse Mortgage: 8.875%

Variable Rate Jumbo Reverse Mortgage: 6.65%

Of course, interest rates do not include closing costs which vary. A reverse mortgage quote will provide the details like closing costs and the Total Annual Loan Cost.

My blog: http://www.activerain.com/blogs/reversemortgagescalifornia

First Bank of America pulled their jumbo reverse mortgage product and now it's the 800 pound gorilla of the industry, Financial Freedom. The company, a division of Indy Mac Bank, just announced that the last day they will accept applications for their program called the Cash Account is June 30th.

Fortunately, there are still several jumbo reverse mortgage programs available in the marketplace. So seniors with high-value homes need not despair! At least for now . . .

Will more heads (or programs) roll? Probably. Stay tuned!