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California Mortgage Loan Company specializes in cash out loans for California homeowners seeking the best home financing options. Our lenders are featuring reverse mortgage with special incentive for seniors seeking home equity conversion. Reverse mortgages allow owners to pay off their home loans, pull out cash for debt consolidation, to set up a credit line or purchase second homes. Seniors love these reverse home loans because they offer cash without requiring any monthly payment obligations.

All About Reverse Mortgages

A reverse mortgage allows California homeowners to convert the equity in your home into a lump-sum payment, monthly income, or a line of credit.

Why would you want to do that?

Well, it can be a useful strategy in retirement (you must be at least 62 years of age to qualify for such a mortgage) if you want some extra income. It's called "reverse" because it reverses the direction of the payments: instead of building up equity in your house by putting the money in, you actually reduce equity in the house by taking money out.

No payments are made on the loan until you no longer occupy the home as your primary residence. When you move or sell your home, the loan balance is due and payable. However, the loan balance is never allowed to exceed the value of your home.

  • What are the eligibility requirements for a reverse mortgage?
  • You and all co-borrowers must be a minimum of 62 years old.
  • The home should have a very low mortgage balance or be owned free and clear.
  • The home must be owner-occupied. FHA-approved condominiums and two- to four-unit dwellings (owner occupied) are also eligible.
  • How is my equity determined?

The allowable equity is calculated based on three factors:
  • The youngest borrower's age
  • The appraised value of your home
  • The FHA maximum loan limit for your county

Home Equity Conversion Mortgage was created by the Department of Housing and Urban Development with an effort to let homeowners 62 years or older with little or no remaining balance on their mortgage, convert their property equity into money. The equity can be paid to the homeowner as a lump sum, a stream of payments, and a set amount of draws from a line of credit, or a combination of monthly payments and a line of credit. Whatever payment plan you choose, you do not have to repay any part of this reverse mortgage until you sell the home or vacate it for another reason (unless you violate the loan's terms and conditions).

At that time, you pay-off the remaining loan balance, plus any accrued interest. Any proceeds above that amount go to you or to your estate. By far the most popular reverse loan is the Home Equity Conversion Mortgage insured by the Federal Housing Administration. FHA's program is booming -- total loans closed in the last year alone jumped by 49 percent to nearly 72,000.


What fees are involved?

Like most loans, you will pay an origination fee, appraisal fee, title fee, escrow fee, recording fee, and a monthly servicing fee. These fees can be included in your loan balance, if there is enough equity available.

What happens when the loan balance exceeds the value of my home?

You must occupy the property, and are responsible for maintenance and payment of taxes and insurance. As long as you abide by the loan agreement, you cannot be forced to sell or vacate your home. No deficiency judgment may result from your reverse mortgage. FHA insurance guarantees against any loss to the lender.

What if my home is in need of repairs?

With the reverse mortgage, repairs can be paid for out of the available equity. Some of the repairs can even be done after your loan has closed and funded.

 

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