An Introduction to Reverse Mortgage
A reverse mortgage is a unique loan option available to certain seniors age 62 and older. This type of loan is insured through the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development. Reverse mortgages allow seniors to live in their homes or purchase a new home as a primary residence and live mortgage free in exchange for the equity they have built. The Corban Financial Group is a local lending team serving clients in Redondo Beach, Torrance, Hermosa Beach, Rancho Palos Verdes, Palos Verdes Peninsula, San Pedro, and surrounding California. We work closely with each of our clients to evaluate their eligibility for reverse mortgage and assist them through the approval process. If you are considering a reverse mortgage, contact Corban Financial Group to schedule a consultation or to ask any questions as you begin the process.
The Basics of a Reverse Mortgage
The most common type of reverse mortgage is a home equity conversion mortgage (HECM), the type of loan we will focus on. HECM loans were created by and are insured through the FHA to allow seniors the opportunity to convert the equity in their homes into cash or a line of credit, while continuing to live in their primary residences without making mortgage payments.
Borrowers may choose to live in their current home, or use their HECM loan to purchase a new primary residence. To receive a reverse mortgage for purchase, seniors must pay the difference between HECM proceeds and the sale price of their old homes, in addition to the cost of closing for the newly purchased property.
It is important to note that when you obtain an HECM, Corban Financial Group will not own your home. If you choose to move into a new home, you can pay off the remainder of your loan and keep your home. Likewise, if you die, your family will have the option to pay off your loan and keep your existing home.
HECM Payout Options
Clients may choose the type of HECM payout best-suited for their needs. Some clients choose to receive a lump sum in exchange for their home equity. This option typically provides less cash than alternate HECM payouts, but does provide a larger sum faster. Many clients choose monthly distributions for their HECM loans, which provide supplemental income over time. Others still choose to use their HECM loans as a line of credit. Some clients combine two or more of these options in a customized payout plan. The team at Corban Financial Group can help you explore which option makes sense for you and your family.
Qualifying for a Reverse Mortgage
HECM loans are fully funded through private, approved lenders like Corban Financial Group, and insured through the FHA. Before a borrower is approved for an FHA loan, he or she must meet certain eligibility requirements:
- The borrower or youngest borrower in a couple must be 62 years of age or older.
- Borrowers must have fully paid off or nearly paid off their existing mortgage.
- Borrowers must be able to pay living expenses and costs of maintaining their homes, including property taxes, homeowner’s insurance and more.
- Borrowers must not have outstanding federal debts.
- Borrowers must agree to live in their homes as their primary residences for the entirety of the loan contract.
Our qualified loan agents will help you determine if HECM sounds like a good fit for you. In the final step of HECM qualification, you will listen to an informational session from an FHA-approved counselor, which provides extensive information on the loan process and stipulations.
Getting Started on a Reverse Mortgage
A reverse mortgage is a wonderful loan option for clients in certain situations with certain unique needs. The Corban Financial Group values long-term relationships with our clients, and we will go the extra mile to ensure you are matched with the right loan option for you and your family. Contact us to schedule a consultation about your financial goals today. We happily serve clients in Redondo Beach, Torrance, Hermosa Beach, Rancho Palos Verdes, Palos Verdes Peninsula, San Pedro, and across California.