Exploring Reverse Mortgage Options in California

Hey there, California residents! A reverse mortgage is one of the unique mortgage options available to you if you're aged 62 or even 55. The best part? No monthly payments are needed! Instead, they use your home's equity to send funds your way.

In this article, I'll explain how reverse mortgages work in California, covering all the requirements based on state law. Let's get started!

How Does a Reverse Mortgage Work in California?

Have you ever wondered how your lender sends you funds through reverse mortgages?

• It's with the help of your home's equity! Yes, the value of your home is one of the major determinants of how much funds you can receive. Plus, there are no restrictions on how you can spend your funds.

• When it's time to repay, your lender will get their money back when you sell your home, refinance, move out permanently, or upon your passing.

• But, sometimes this whole process can be tricky. So, to make sure you're making the right decision, your lender will require you to talk to a HUD-approved counselor.

Once everything is done and you're aware of your reverse mortgage responsibilities in California, you can go ahead and confirm your application.

Types of Reverse Mortgages in California

Reverse mortgages come in 4 variations, like;

Let’s have a detailed look at the requirements you need to meet to get your VA loan approved.

• 1. Home Equity Conversion Mortgage (HECM)

This is the most common type, allowing homeowners aged 62+ to tap into home equity without restrictions, backed by the FHA with a lending limit of $1,149,825.

• 2. Single-Purpose Reverse Mortgage

As the name goes by, a single purpose reverse mortgage is used for specific purposes like home improvements, available to homeowners aged 62+, but funds must be used for a single approved purpose.

• 3. Jumbo Reverse Mortgage

These are home loans for seniors who wish to borrow more than the FHA limit of $1,149,825.

They aren't FHA-backed and come with higher interest rates, but they don't have mortgage insurance premiums. Jumbo reverse mortgages are also available for homeowners ages 55 or older.

• 4. HECM for Purchase

Combining a reverse mortgage with a down payment from selling a previous home, a HECM reverse mortgage for purchase lets retirees upsize or downsize without monthly mortgage payments.

Requirements of California Reverse Mortgage

To get the green light on a reverse mortgage loan in California, here's what you need to have in your corner!

1. • ➙ You must be at least 62 years old for all of the reverse mortgage types, except for the jumbo reverse mortgage, where you can qualify even if you're aged 55 or older.

   • ➙ You need to own your home outright or have a low mortgage balance.

   • ➙ Your home must be your primary residence throughout the duration of the loan, typically a single-family home or an approved condominium.

   • ➙ Lenders may evaluate your income, credit history, and debts to ensure you can maintain property taxes, insurance, and home maintenance.

   • ➙ You'll need to attend a counseling session with a HUD-approved counselor to understand the risks and benefits of a reverse mortgage.

   • ➙ You're responsible for keeping up with property taxes, homeowners insurance, and property maintenance.

Key Highlights from California State Law

Let's now take a closer look at the main highlights of California's State Law regarding reverse mortgages.

• Before applying for a reverse mortgage, California law mandates that lenders provide borrowers with a list of at least 10 nonprofit counseling agencies. This ensures borrowers fully understand the risks involved.

• Lenders must give borrowers a statement in plain language discouraging the use of reverse mortgage proceeds to purchase annuities or related financial products.

• Borrowers receive a worksheet guide outlining topics to discuss with counselors. This guide, along with the borrower's signature, is returned to the lender after counseling.

• Borrowers must provide the lender with a certification of counseling to confirm they underwent the required counseling.

• Before charging any fees or accepting an application, lenders must wait 7 days after the borrower receives counseling.

KreditSanta's Reverse Mortgage Process

Here’s how KreditSanta approaches reverse mortgages to fit your needs.

• Understand Your Financial Goals

We'll kick things off by getting to know you and your financial goals. Together, we'll explore how reverse mortgages can align with your plans and lifestyle. Our priority is ensuring that a reverse mortgage is the right choice for you at this stage of your life.

• Guidance through Mandatory Counseling

You'll participate in a mandatory counseling session with a HUD-Approved Counselor to confirm eligibility. During the session, you'll have the opportunity to ask questions and receive unbiased information.

• Arranging for Property Appraisal

We'll arrange for a professional property appraisal to assess compliance with safety and HUD standards. You'll receive an estimate of your home's value to determine potential loan proceeds.

• Securing Your Reverse Mortgage Funds

Once your application is approved, we'll swiftly move forward with creating and funding your reverse mortgage. You'll have the flexibility to choose your preferred disbursement method, whether it's monthly installments, a line of credit, or a lump sum payment.

Your satisfaction is our priority, and we're here to accommodate your preferences every step of the way.

Let's Get Rolling: Start Your Application Now

Ready to make the most of your California home's value? Don't wait – let's kickstart your journey to financial freedom with a reverse mortgage from KreditSanta.

Whether you're in bustling Los Angeles, beautiful San Francisco, sunny San Diego, or anywhere else in rural California like Mariposa, Sierra, Alpine, or Modoc, our team is here to support you every step of the way. Reach out to us and meet with an expert reverse mortgage loan officer today.