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Features of Reverse Mortgages – San Diego Advice

With the reverse mortgages San Diego lenders offer, homeowners over the age of 62 can benefit from a very special loan structure designed especially to make the life of retired people easier from a financial point of view. The loan has a very suggestive name: it is a reverse loan because it does not require the borrower to make any monthly payments towards the lender – he or she will receive monthly payments from the lender instead.

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How Do Reverse Mortgages Work?

Regular mortgages, also called forward mortgages, make money available for borrowers, requiring them to pay back that money by making regular, usually monthly payments toward the lender, thus decreasing the mortgage balance and increasing the equity on the property with each payment. Reverse mortgages work the other way around: the homeowner practically transforms the equity built on the property (the difference between the current value of the property and the amount still owned on the mortgage) into cash that is paid by the lender in the form of a single lump sum, a credit line, in monthly installments or in a form that combines the latter two options.


The property with the equity transformed into cash will stay in the borrower’s property and will serve as a security for the loan. The equity on the property decreases as the loan progresses, while the debt accrued by the borrower increases in equal measure. Upon the termination of the loan in any way – the borrower moves from the property or passes away – the lender will recover the money paid to the borrower by selling the property. The equity left on the property, if any, goes to the borrower or is distributed among the borrower’s heirs.


Eligibility for Reverse Mortgages – San Diego Lenders and the Conditions They Work With


Reverse mortgages are available for senior citizens, the lowest age you can apply for such a loan being 62 years of age. However, when applying for reverse mortgages, San Diego citizens and the property used as security must fulfill certain conditions:

  • The property offered as security must be a single family home the borrower lives in or a home that comprises 3-4 units, out of which at least one unit must be occupied by the borrower;
  • To qualify for the reverse mortgage, the borrower must be the owner of the property or have a very low mortgage balance that can be paid off with proceeds from the reverse loan;
  • The borrower must have a financial situation that permits him or her to pay property charges such as taxes.


If you want to find out more about eligibility conditions and the process of applying for reverse mortgages, San Diego counselors can help you understand the process in detail so that you can make an informed decision about the type of mortgage and the amount to apply for. The list of counselors is to be found on the website of the U.S. Department of Housing and Urban Development (HUD). With the help of local experts in reverse mortgages, San Diego borrowers can make the best use of this excellent loan opportunity.


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