According to the Agency of Aging, by 2040, nearly 500,000 people age 60 and older are projected to be living in Sacramento County. This is almost three times the number of seniors living in Sacramento County in 2000 and accounts for 177% growth rate for the forty year period.
Homeowners searching for a Sacramento reverse mortgage lender may be looking for some much needed financial assistance. A reverse mortgage is a loan that allows seniors ages 62 and over, to access some of the equity they’ve built in their home. In most cases, the loan does not need to be repaid until the last surviving spouse moves out or passes away. As in other states, reverse mortgage loans in California are Federal Housing Administration (FHA) insured and do not require monthly mortgage payments1.
There are some requirements that must be met in order to be eligible for a reverse mortgage loan.
- You must be 62 years of age or older
- You must own the property outright or paid-down a considerable amount
- You must occupy the property as your principal residence
- You must not be delinquent on any federal debt
- You must participate in a counseling session with a HUD- approved HECM counselor
According to Trulia, the median sales price for a home in Sacramento from March, 2013 through May, 2013 was $180,000. This is a 38.5% increase compared to the same period in 2012. Californians may be able to use some of their home equity to pay for living expenses or needed home repairs. Many reverse mortgage loan borrowers use the funds to supplement their retirement income, pay medical bills, or travel. Borrowers can use the reverse mortgage loan funds however they would like.
In addition to rising home costs, health care is also increasing and a financial burden to many seniors. A Sacramento Bee article covered the discrepancy in hospital costs across the greater Sacramento area. “Hospital pricing experts say there is little rhyme or reason behind the vast differences in chargemaster rates, or in how much hospitals are ultimately willing to come down in price during negotiations with insurers.” Chargemaster rates are dockets of prices that give a baseline for negotiation with health insurance companies and government programs. With few guarantees in the world of medical insurance, many retirees are looking for a more financial security, something that a reverse mortgage loan may offer.
When researching Sacramento reverse mortgage lenders, it is important to understand the Total Annual Loan Cost (TALC), which should also be explained by your reverse mortgage counselor. Anyone interested in the benefits of a reverse mortgage loan, or any major financial decision, should discuss their individual financial situation and goals with a trusted financial adviser before moving forward. During the loan process, all borrowers are required to meet with a reverse mortgage counselor who will explain the loan in detail and answer any questions they may have. A list of U.S Department of Housing and Urban Development approved counselors can be found here.
There are multiple payment options available with a reverse mortgage loan. Your current financial needs, long term goals and value of your home are all factors in determining which payout option is best for you.
- A “term” option – equal monthly payments for a fixed period of months.
- A “tenure” option – equal monthly payments for as long as you live in the home as your primary residence.
- A line of credit – the borrower will receive the proceeds in unscheduled payments or in installments, at times and in amounts of the borrower’s choosing, until the line of credit is exhausted.
- A combination of monthly payments and a line of credit.
If you are interested in learning about reverse mortgage loan lenders or how you may qualify for a reverse mortgage loan in Sacramento, please contact us for more information at 866 751.2606.