Reverse Mortgage Los Angeles
These words, “reverse mortgage Los Angeles,” are typed into the Google or Yahoo or other web search field hundreds of times each month. Los Angeles is one of the main centers in California for originations of reverse mortgages, and California as a state has originated more reverse mortgages than any other state.
Demographics would indicate that the popularity of reverse mortgages in California will only increase over time. The elderly population in California is expected to grow more than twice as fast as the total population. Over half the counties in California will have increases of at least 100% in this age group, and eleven counties will have increases of at least 150% in the 1990 to 2020 time period. The county of Los Angeles is expected to have a senior population growth of 50-100%, but because the population of Los Angeles is so large, those effects will far outweigh those less densely populated counties with a higher percentage of growth.
A large population of seniors is important for reverse mortgage popularity of course because this loan program is only available to those age 62 and over. It was signed into law by President Ronald Reagan in 1988 because so many seniors and senior groups like the AARP were requesting it. The basic idea of the reverse mortgage is to allow seniors to tap into the equity of their home without having to make payments. Instead of monthly payments, the interest accrues onto the principal balance and is ultimately paid upon the sale or refinance of the home.
It seems logical that seniors be able to use the equity they have worked so hard to build, in order to make their retirement years more comfortable and worry-free. The crunch of rising health care costs and other necessities, combined with a fixed or declining income, can make it difficult for many seniors to get by.
Still, it was difficult to get lenders to put together a program to meet this need, and it finally took the power and backing of the federal government to make it happen. The reverse mortgage (or HECM, Home Equity Conversion Mortgage) is insured by the Federal Housing Authority (FHA). This gives the lenders the assurance that they can lend large sums of money to a senior, receive no payment on this lending maybe for decades, and still get the money plus interest back in the end.
Los Angeles area seniors have been waking up to the fact that they not only have access to this program, but that the housing values in Los Angeles (and so many places across California) are almost double what they are in the nation as a whole. Because what a borrower is eligible to receive depends not only upon age (the older you are the more you receive) but also upon value, reverse mortgages get more attractive as the value increases.