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530-274-0916
Serving The California Marketplace
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Reverse Mortgages

A reverse mortgage is a special type of loan made to older homeowners to enable them to convert the equity in their home to cash to finance living expenses, home improvements, in home health care, or other needs.

With a reverse mortgage, the payment stream is "reversed." That is, payments are made by the lender to the borrower, rather than monthly repayments by the borrower to the lender, as occurs with a regular home purchase mortgage.

A reverse mortgage is a sophisticated financial planning tool that enables seniors to stay in their home or "age in place" and maintain or improve their standard of living without taking on a monthly mortgage payment. The process of obtaining a reverse mortgage involves a number of different steps.

The first most widely available reverse mortgage in the United States was the federally insured Home Equity Conversion Mortgage (HECM), which was authorized in 1987.

A reverse mortgage is different from a home equity loan or line of credit, which many banks offer. With a home equity loan or line of credit, an applicant must meet certain income and credit requirements, begin monthly repayments immediately, and the home can have an existing first mortgage on it. In addition, there is no restriction on the age of borrowers.

In general, reverse mortgages are limited to borrowers 62 years or older who own their home free and clear of debt or nearly so, and the home or have substantial equity.

Borrowers usually have a choice of receiving the proceeds from a reverse mortgage in the form of a lump sum payment, fixed monthly payments for life, or line of credit. Some types of reverse mortgages also allow fixed monthly payments for a finite time period, or a combination of monthly payments and line of credit.

The size of reverse mortgage that a senior homeowner can receive depends on the type of reverse mortgage, the borrower's age and current interest rates, and the home's property value. The older the applicant is, the larger the monthly payments or line of credit. This is because of the use of projected life expectancies in determining the size of reverse mortgages.

Seniors do not have to meet income or credit requirements to qualify for a reverse mortgage.

Unlike a home purchase mortgage or home equity loan, a reverse mortgage doesn't require monthly repayments by the borrower to the lender. A reverse mortgage isn't repayable until the borrower no longer occupies the home as his or her principal residence.

This can occur if the sole remaining borrower dies, the borrower sells the home, or the borrower moves out of the home, say, to a nursing home.

The repayment obligation for a reverse mortgage is equal to the principal balance of the loan, plus accrued interest, plus any finance charges.

The loan may be repaid by the borrower or by the borrower's family or estate, with or without the sale of the home. If the home is sold and the sale proceeds exceed the repayment obligation, the excess funds go to the borrower or borrower's estate. If the sales proceeds are less than the amount owed, the shortfall is usually covered by insurance or some other party and is not the responsibility of the borrower or borrower's estate. In general, the repayment obligation of the borrower or borrower's estate can't exceed the value of the property.

In general, a borrower can't be forced to sell their home to repay a reverse mortgage as long as they occupy the home, even if the total of the monthly payments to the borrower exceeds the value of the home.

Download a Reverse Mortgage Application

Nevada County Mortgage, a dba Northern Sierra Financial Services
426 Sutton Way #114
Grass Valley, CA 95945
Office: (530) 274-0916
Fax: (530) 274-7620
Real Estate Broker
Department of Consumer Affairs
Bureau of Real Estate
State of California
(877) 373-4542
 
Shelley Mortara
Broker / Loan Consultant
NMLS #254913
BRE #01159350
 
 
Wendy Wells
Loan Consultant
NMLS #254875
BRE #01432994
 

Northern Sierra Financial Services · BRE #01851459 · NMLS #235599

Nevada County Mortgage, a dba Northern Sierra Financial Services
426 Sutton Way #114
Grass Valley, CA 95945
Office: (530) 274-0916
Fax: (530) 274-7620
Real Estate Broker
Department of Consumer Affairs
Bureau of Real Estate
State of California
(877) 373-4542
 
Shelley Mortara
Broker / Loan Consultant
NMLS #254913
BRE #01159350
 
 
Wendy Wells
Loan Consultant
NMLS #254875
BRE #01432994
 

Northern Sierra Financial Services · BRE #01851459 · NMLS #235599