There are currently three basic types of Reverse Mortgage Loans San Diego available. They are home equity reverse mortgages, conventional reverse mortgage loan, and jumbo reverse mortgage loans. The home equity reverse mortgage is currently the most popular form of reverse mortgage financing available to consumers.
Home equity reverse mortgage loans are made possible through federal government plans. These programs aim to make the loan process easier for homeowners, increasing the number of people financed. This increase in the number of loans makes it possible for homeowners to pay off their debts at reduced rates, with a more extended period to enjoy the benefits. However, there is a drawback that many people do not foresee; the federal government may eventually cease such programs or reduce their participation in the program in the future.
The second option, the conventional reverse mortgage loans, allows the borrower to take out funds from his or her federal income taxes for making use of the funds as the reverse mortgage. If the borrower agrees to a specified interest rate and the interest rate is fixed, then the value of the equity will remain unchanged throughout the life of the loan. This is referred to as a fixed-to-variable interest rate. On the other hand, the Jumbo Reverse Mortgage loans are made possible by allowing the borrower’s heirs to take possession of the house. In some cases, the heirs can sell the house after the borrower dies.
Some companies offer proprietary reverse mortgages, which allow only a limited number of people to benefit from them. Usually, this is limited to people who belong to a specific ethnic group or who own their house for a particular number of years.
Anytime there is a substantial increase in the value of the borrower’s house or any change in the loan composition, the value of the proceeds will decrease. The borrower may be allowed to pay down his or her existing loan balance with the proceeds from the new loan. Alternatively, he or she may be allowed to take out a new mortgage that does not have to be repaid until the new value of the house is equal to or greater than the loan balance. This allows the borrower to pocket the difference between the home’s unique value and the loan balance.
All reverse mortgage loan limits are federally authorized and cannot be taken advantage of by anyone. A few states allow for a higher maximum loan amount, but the borrower has to be a resident of that state. There is no legal action or other penalties for not complying with reverse mortgage loan limits. This means that virtually anyone can take advantage of this option.