Reverse Mortgage San Diego: HECMs In Sight
There were times in the past when someone who was thinking “reverse mortgage San Diego” was thinking against the tide. Why is this?
Well, the biggest factor for qualifying for a reverse mortgage, other than age, is home value, and how it relates to your loan balance. If your home is worth $300,000 but you owe $275,000, you are not going to get a reverse mortgage, unless you can bring a truck full of money to escrow to pay down your balance. A reverse mortgage requires a certain amount of equity. If the youngest borrower is 62, you need about 38% equity, not counting the costs of the loan. If the youngest borrower is 72, you need about 32% equity. If the youngest borrower is 82, you need about 27% equity.
So far, so good, one would think, as far as San Diego is concerned. The San Diego metro area has long ranked in the top ten most expensive housing markets in the United States, and it would surely have its share of homeowners with enough equity to take advantage of a reverse mortgage. In fact, the prevalence of expensive homes with correspondingly expensive mortgage payments, would make San Diego a place where reverse mortgages would most flourish.
But here’s the kicker. It’s not just the home value, it’s the amount set by HUD as the loan limit. In 2006 and 2007, the loan limit for San Diego County was $362,790. In 2006, half the home values in San Diego County were over $500,000. So let’s say in 2006 someone in San Diego had a home worth $500,000 and a mortgage balance of $362,790, with about 27% equity. However, for purposes of a reverse mortgage they had zero equity, because HUD would not recognize a value higher than $362,790. No wonder HECMs were not very popular in San Diego or other high value areas at that time. It just did not meet the needs of a lot of people.
On November 1, 2008, the HECM loan limit for the county was increased to $417,000, and then in February 2009 it was increased again to $625,500. Suddenly many more households were eligible, and the number of reverse mortgages increased dramatically. It enabled a huge boost to the cash flow and lifestyle of many people, exactly what the government was hoping for with the increase.
So now, someone who does a web search for “San Diego reverse mortgage” is part of a growing trend of residents who are investigating how a HECM answers their needs. If you want to work someone in the San Diego area for your reverse mortgage, click on the Calculator, fill in your information, and we will help you.