Reverse Mortgages
Joann Ton
LOAN OFFICER
NMLS# 1461031
Reverse Mortgage Topics Covered
- What is a Reverse Mortgage?
- How to Qualify for a Reverse Mortgage
- Types of Reverse Mortgages
- Ways to Receive Proceeds from a Reverse Mortgage
- Benefits of a Reverse Mortgage
What is a Reverse Mortgage?
A jumbo home loan, also known as a jumbo mortgage, is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA). Although they are nonconforming mortgages, jumbo loans still must fall within the guidelines of what the Consumer Financial Protection Bureau considers a “qualified mortgage”.
Jumbos are considered riskier for lenders because they can’t be guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults.
Jumbos are considered riskier for lenders because they can’t be guaranteed by Fannie Mae and Freddie Mac, meaning the lender is not protected from losses if a borrower defaults.
How to Qualify for a Reverse Mortgage
The primary homeowner must be age 62 or older to apply. However, if you are under 62, you may still be able to get a reverse mortgage if you meet other eligibility criteria. For example:
- Proof of income and assets.
- Employment verification
- A driver’s license/state ID card.
- A valid social security number.
Types of Reverse Mortgages
- Proprietary reverse mortgages – these are private loans not backed by any government entity. Typically you can receive a larger loan advance from this type of reverse mortgage, especially those who have higher-valued homes.
- Proprietary reverse mortgages – these are private loans not backed by any government entity. Typically you can receive a larger loan advance from this type of reverse mortgage, especially those who have higher-valued homes.
- Proprietary reverse mortgages – these are private loans not backed by any government entity. Typically you can receive a larger loan advance from this type of reverse mortgage, especially those who have higher-valued homes.
Ways to Receive Proceeds from a Reverse Mortgage
- Proprietary reverse mortgages – these are private loans not backed by any government entity. Typically you can receive a larger loan advance from this type of reverse mortgage, especially those who have higher-valued homes.
- Proprietary reverse mortgages – these are private loans not backed by any government entity. Typically you can receive a larger loan advance from this type of reverse mortgage, especially those who have higher-valued homes.
- Proprietary reverse mortgages – these are private loans not backed by any government entity. Typically you can receive a larger loan advance from this type of reverse mortgage, especially those who have higher-valued homes.
Ways to Receive Proceeds from a Reverse Mortgage
- The borrower does not need to make monthly payments toward their loan balance.
- Proceeds can be used for living expenses, debt repayment, healthcare expenses, and more.
- Funds can help borrowers enjoy their retirement.
- Non-borrowing spouses can stay in the home after the borrower dies.
- Non-borrowing spouses can stay in the home after the borrower dies.
- Non-borrowing spouses can stay in the home after the borrower dies.
The Reverse Mortgage Process
If you believe a reverse mortgage is the solution for you, applying for one is similar to that of a traditional home equity loan. Once you meet the eligibility criteria, shop around to find the best deal.
The Los Angeles lender will assess your financial situation including evaluating your credit history, any outstanding mortgage and ensuring your property qualifies (as in you don’t have any active property liens). You’ll also need to provide proof that you’re able to pay for ongoing housing costs, and order a property appraisal to determine its value and how much you can borrow.
Once you close on your loan, you have the right of rescission, or your right to cancel your mortgage without penalty. In order to do so, you need to notify your lender within three business days after closing in writing.
Make sure to keep all copies of any correspondence and send your letter via certified mail and ask for a return receipt so that you’ll know it got into the right hands. Afterwards, your Los Angeles lender will have 20 days to return any fees you’ve paid for the reverse mortgage.
The Los Angeles lender will assess your financial situation including evaluating your credit history, any outstanding mortgage and ensuring your property qualifies (as in you don’t have any active property liens). You’ll also need to provide proof that you’re able to pay for ongoing housing costs, and order a property appraisal to determine its value and how much you can borrow.
Once you close on your loan, you have the right of rescission, or your right to cancel your mortgage without penalty. In order to do so, you need to notify your lender within three business days after closing in writing.
Make sure to keep all copies of any correspondence and send your letter via certified mail and ask for a return receipt so that you’ll know it got into the right hands. Afterwards, your Los Angeles lender will have 20 days to return any fees you’ve paid for the reverse mortgage.
Frequently Asked Questions
Jumbo mortgage loan amounts exceed the current maximum dollar amount guaranteed by GSEs. This amount can vary a little from state to state when you consider high-priced or luxury markets.
What’s the best program for a jumbo loan?
You are not limited to a 30-year fixed rate program with a jumbo mortgage. Many people choose an adjustable rate mortgage (ARM) program to take advantage of a lower interest rate and lower monthly payment.
Does a jumbo loan have a higher interest rate than a conforming loan?
Not necessarily. In the past, jumbo loans generally had higher interest rates than conforming loans. However, jumbo rates are ever changing and may be higher or lower than conforming rates as of late.
If my credit score is low, how can I raise it?
Paying your bills on time, reducing your credit balances, and trying to not apply for credit too often are all ways that you can raise your FICO score.
A jumbo loan can be a great fit for Los Angeles homebuyers who are in a strong financial position and want to secure a large loan. But just because you may qualify for one of these loans doesn’t mean you should take one out.
Due to the size of the loan, as well as the lack of government insurance, lenders assume greater risk with these mortgages. And if you’re not looking to buy a higher-priced home, or you feel unprepared to take on a substantial, long-term financial commitment, you should probably rethink getting a jumbo home loan.
As always, you should borrow with care and crunch the numbers carefully to see what you can truly afford and what kinds of benefits you will receive from a loan like this. It’s a good idea to compare terms to see if taking out a smaller conforming loan, plus a second loan, instead of one big jumbo, might prove better for your finances in the long haul.
A jumbo loan can be a great fit for Los Angeles homebuyers who are in a strong financial position and want to secure a large loan. But just because you may qualify for one of these loans doesn’t mean you should take one out.
Due to the size of the loan, as well as the lack of government insurance, lenders assume greater risk with these mortgages. And if you’re not looking to buy a higher-priced home, or you feel unprepared to take on a substantial, long-term financial commitment, you should probably rethink getting a jumbo home loan.
As always, you should borrow with care and crunch the numbers carefully to see what you can truly afford and what kinds of benefits you will receive from a loan like this. It’s a good idea to compare terms to see if taking out a smaller conforming loan, plus a second loan, instead of one big jumbo, might prove better for your finances in the long haul.