San Diego Reverse Mortgage

Frequently asked questions about San Diego Reverse Mortgage

• What are the eligibility criteria for a reverse mortgage in San Diego?

  For reverse mortgages, applicants must be at least 62 years old and use the property as their principal residence. They must have no student loans or unpaid taxes or be able to cover them with their loan proceeds.

  You must undergo counseling with a HUD-approved financial counselor before your loan can be approved.

• How much home equity do I need for a reverse mortgage in San Diego?

  You should have at least 50% equity for a HECM reverse mortgage. However, proprietary reverse mortgages provided by private lenders may have different approval percentages.

• What are the typical fees and closing costs of a reverse mortgage in San Diego?

  You must pay origination fees to the lender, which are capped at $6,000 for HECM loans. You’ll also have closing costs for title searches, inspections, and appraisals. Lastly, HECM loans have an initial mortgage insurance premium of 2% and ongoing annual mortgage insurance premiums.

• How will a reverse mortgage affect my property taxes and insurance in San Diego?

  You will still be responsible for real estate taxes and homeowners’ insurance, which should not be adversely affected by your new loan.

  As a plus, though, these loans provide tax-free cash, so you won’t have to pay more income taxes. Your Social Security and Medicare benefits will also not be impacted.

• What happens if I move or sell my home in San Diego with a reverse mortgage?

  When the borrower is no longer living in the mortgaged home as their principal residence, the loan comes due. That means that you’ll enter repayment if you sell the home or move into a new residence. As with your original mortgage, you will make regular monthly payments on the balance.

• Can I refinance my existing reverse mortgage in San Diego?

  Yes, you can refinance a reverse mortgage, such as by adding a new cosigner or changing your interest rate. It’s also possible to take out a larger loan if you have more significant home equity or to convert your current reverse mortgage into a traditional home loan if you want to begin making payments again.

  To refinance, you’ll need to cover the same qualifications as before, including age, ownership of the home, using it as a principal residence, and being able to cover the home’s expenses.

• How do San Diego home values impact the loan amount for a reverse mortgage?

  The San Diego, California, housing market determines how much your home is worth and, therefore, how much you can receive from a reverse mortgage. When home values rise, so does the possible loan amount you may be approved for.

  Thankfully, San Diego real estate prices have increased significantly in recent years, so you may have far more available for your reverse mortgage than you expect.

• How does a reverse mortgage affect my heirs or estate in San Diego?

  If the borrower passes away, their surviving family members are responsible for the loan. They can either cover the loan or sell the property for at least 95% of its market value. The 95% rule only kicks in if the home is underwater. Otherwise, heirs can sell the home for their preferred price.

• Are there restrictions on how I can use the funds from a San Diego reverse mortgage?

  A HECM loan insured by the FHA does not have restrictions on how your mortgage proceeds can be used. However, it’s possible to get single-purpose proprietary reverse mortgages, which will be restricted on how you can use them.

  You and the lender will agree on a purpose for the loan, and you will prove to the mortgage company that you have applied it toward that specific need.

• How long does the reverse mortgage process take in San Diego?

  In general, the process of a reverse mortgage takes 30-45 days, but this may differ depending on factors like the complexity of the loan, how soon you schedule your financial counseling, and whether the underwriters need additional information from you.

  A reverse mortgage specialist will keep you informed about the approval process every step of the way and answer any questions you may have so that you have a clear guideline for when you can expect your funds.