Reverse Mortgage

Reverse mortgages allow homeowners aged 62 years or older to withdraw some of the equity in their home and convert it into cash – and not have to pay it back until they move out or pass away. Reverse mortgages are popular amongst seniors who have equity in their home and want to supplement their income.

The U.S Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) offers the Home Equity Conversion Mortgage (HECM), one of the most popular reverse mortgage programs. The HECM is a safe alternative resource that can provide older Americans with greater financial security and independence.

The HECM standard loan requires an Initial Mortgage Insurance Premium of 2% of the FHA maximum claim amount.You may apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage, but must meet the following specifications:

  • 62 years of age or older
  • Property used as collateral must be the primary residence
  • Property being used as collateral must be owned or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan
  • Must be single-family home or a 2-4 unit home with one unit occupied by the borrower (HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible)
  • No delinquencies on any federal debt, suspensions, debarments, or excluded participation from FHA programs
  • Completion of HECM counseling

Once the loan has closed, the borrower must adhere to the following:

  • Occupy the home as a principal residence
  • Make timely payments of their property taxes, Home Owners Association (HOA) fees, ground rents, etc.
  • Maintain homeowner’s hazard insurance policy
  • Maintain the property in a condition equal to when the loan was closed

The allowable amount of money borrowed varies loan to loan, and can depend on:

  • Value of home
  • Age of youngest borrower
  • Current interest rate
  • Disbursements are made in equal monthly payments or in amounts defined by the homeowner

Beginning October 4, 2010, homeowners seeking to obtain a FHA Home Equity Conversion Mortgage (HECM) now have the option of reducing their closing costs by selecting HECM Saver as their initial mortgage insurance premium. The HECM Saver differs from the traditional HECM Standard Program in that eligible borrowers 62 and older will be charged significantly lower upfront fees. However, the lower upfront fees do result in less money being made available to the borrower than is available under HECM Standard.

There are no additional eligibility requirements for HECM Saver; homeowners just need to meet existing HECM program requirements. HECM Saver is available for all HECM transaction types and payment plans. Additional information about HECM Saver can be obtained from a HUD-approved HECM Counselor or FHA-approved lender.

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From our Clients:

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Anthony and Kathleen Toscano, Morro Bay
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Susan Manbeian, Cambria


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Central Coast Lending Reach

We offer home loans / mortgages to the Central Coast and the entire state of California, including:

San Luis Obispo County:

Arroyo Grande, Atascadero, Avila Beach, Cambria, Cayucos, Creston, Grover Beach, Los Osos, Morro Bay, Nipomo, Oceano, Paso Robles, Pismo Beach, San Luis Obispo, San Miguel, San Simeon, Santa Margarita, Shandon, Templeton, and surrounding cities.

Santa Barbara County:

Buellton, Carpinteria, Goleta, Guadalupe, Hollister Ranch, Isla Vista, Lompoc, Los Alamos, Los Olivos, Mission Hills, Montecito, Orcutt, Santa Barbara, Santa Maria, Santa Ynez, Solvang, Cayuma, Vandenberg Village, Garey, Summerland,  and surrounding cities.

Kern County:

Bakersfield, Delano, Arvin, California City, McFarland, Ridgecrest, Maricopa, Taft, Oildale, Lamont, Rosamond, Rosedale, Greenfield, Shafter Lost Hills, Wasco, Bear Valley Springs, Boron, Frazier Park, Wofford Heights, Weedpatch, and surrounding cities.

Monterey County:

Carmel, Del Rey Oaks, Gonzales, Greenfield, King City, Marina, Monterey, Pacific Grove, Salinas, Sand City, Seaside, Soledad, Bradley, Castroville, Chualar, Las Lomas, Lockwood, Moss Landing, Elkhorn, San Ardo, San Lucas, Prunedale, Pajaro, and surrounding cities.

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Our quarterly reports on the Central Coast real estate market feature data on sales, pricing, foreclosures, and more.