Reverse Mortgages California

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!

The rates have gone up this week, probably in response the recent bond market changes. Here are today's interest rates for the top reverse mortgage programs:

FHA Reverse Mortgages:

The HECM, which is the FHA Home Equity Conversion Mortgage rate is 4.01% (Index is the 1 Year CMT at 2.51% plus a margin of 1.5%)

The fixed rate HECM is at 6.81% to 7.00% (depending on the bank)

Jumbo Reverse Mortgages (Non-FHA):

Financial Freedom Cash Account Advantage Reverse Mortgage: 7.010% (Index is 6 month LIBOR at 3.51% plus margin of 3.5%)

Fixed Rate Jumbo Reverse Mortgage: 9.00% (available on home values up to $10,000,000)

A reverse mortgage quote will provide the details like the Total Annual Loan Cost (which is like an APR). The interest rates above do not include closing costs which vary.

It is Tuesday, June 10^th which means it's time for a reverse mortgage interest rate update.

FHA Reverse Mortgages:

HECM, which is the FHA Home Equity Conversion Mortgage rate is 3.64% (Index is the 1 Year CMT at 2.14% plus a margin of 1.5%)

The fixed rate HECM is at 6.56% to 6.83% (depending on the lender)

Jumbo Reverse Mortgages:

Financial Freedom Cash Account Advantage Reverse Mortgage: 6.72% (Index is 6 month LIBOR at 3.22% plus margin of 3.5%)

Fixed Rate Jumbo Reverse Mortgage: 8.625% (available on home values up to $10,000,000)

Get a reverse mortgage quote for the details and Total Annual Loan Cost (like an APR) as these interest rates do not include closing costs which vary.

Reverse mortgages in Florida have become increasingly popular over the past 5 years as seniors have discovered what a viable option they are to secure a more financially comfortable retirement.  A few worthy reasons seniors across the state have adopted reverse mortgage programs include paying off existing mortgage debt to rid themselves of their mortgage payment; to create a monthly stream of income that enables them to afford a more comfortable lifestyle; to make improvements to their home or basic maintenance with a lump sum of cash.  There are endless uses for the additional funds a senior receives from a reverse mortgage.

Having only minimal qualifying requirements makes the reverse mortgages in Florida relatively easy to obtain.  Ample equity in their home is the only essential ingredient to qualify.  Income or other assets and credit scores are not considered when qualifying. But because of this years' decline in Florida real estate, seniors in some parts of the state have found that having adequate equity in their homes is not as certain as it used to be. As the real estate market in Florida is now clearly declining, the amount of home equity that seniors have is shrinking, making it more difficult for many to obtain a reverse mortgage.   But not all parts of the state have been impacted to the same degree.

Miami Reverse Mortgages

One of the hardest-hit markets in Florida, Miami has seen home values drop by as much as 25% in some communities. Seniors are more likely to qualify for only $150,000 on their current home value of $300,000, where they once could qualify for a $200,000 reverse mortgage on the same home, valued at $400,000. On average, home values have declined 18% in the greater Miami area. As if declining values were not bad enough, Miami County is now widely-recognized as a "declining market".  At this point, automatic reduction on loan amounts of 5-6% for jumbo programs in Miami are common for most Florida reverse mortgage lenders. However, FHA reverse mortgage programs remain the most common and are not subject to these additional automatic cuts. 

Tampa Reverse Mortgages

The Tampa real estate market however, is doing better than Miami's.  With an average home price decline of 9% year over year, versus Miami's 18% decline, seniors in the Tampa have retained more home equity.  However, one major jumbo reverse mortgage lender has announced a automatic 6% cut to loan amounts in Tampa, since they consider the area is a declining market. Fortunately, FHA reverse mortgages remain the top choice.

Jacksonville Reverse Mortgages

Unlike most of Florida, Jacksonville has managed to altogether avoid the "declining market" stigma. With the strongest real estate market in Florida, perhaps owing to a strong job center, the median home price has declined 6% in the greater metropolitan area of Jacksonville. Jumbo reverse mortgage lenders have not announced automatic loan amount reductions. Still, the market has seen some declines, making it a good time to take advantage of the reverse mortgage and use the equity while you still have it. Seniors hope their Jacksonville real estate market will remain strong relative to the Tampa or Miami markets.

It is Tuesday, June 3^rd and the day that major lenders update their reverse mortgage interest rates. Here they are for the top programs:

FHA Home Equity Conversion Mortgage (HECM) rate is unchanged this week at: 3.66% (Index is the 1 Year CMT at 2.16% plus a margin of 1.5%)

The FHA Fixed rate HECM Reverse Mortgage:  6.31% to 6.55% (depending on the bank)

Financial Freedom Cash Account Advantage Reverse Mortgage: 6.66% (Index is 6 month LIBOR at 3.16% plus margin of 3.5%)

The rates listed above are not APR's and do not include closing costs. Contact us for a reverse mortgage quote.