Reverse Mortgage In Tacoma

What is a Reverse Mortgage?

You know the traditional mortgage or forward mortgage, but have you heard of a reverse mortgage? A reverse mortgage is a unique mortgage arrangement wherein the homeowner takes out a loan against their home’s equity. Borrowers must be at least 62 years old when obtaining the reverse mortgage and have considerable equity (at least 50%) in their properties. 

How Does It Work?

With a reverse mortgage, borrowers can access the cash they need for cost-of-living expenses late in life. This money can be paid as a lump sum, monthly payment, line of credit, or even a combination of options.

Reverse mortgages are structured so the loan does not exceed the home’s value. When the borrower dies or leaves the property, the lender can foreclose the mortgage and apply the sale proceeds to pay the loan. 

An example of a reverse mortgage we offer at Capital Home Mortgage is the Home Equity Conversion Mortgage program or HECM. These loans are backed by the U.S. Department of Housing and Urban Development (HUD) and can be used for almost anything. Plus, no credit score requirements or collateral are needed since the home itself is a security for the loan. 

Borrower Requirements

To qualify for HECM, the borrower must satisfy all the requirements:

• The borrower is a senior citizen aged 62 years or older
• The subject property is the borrower’s primary residence
• The borrower is not delinquent of any federal debt before the application
• The borrower has the means to make timely payments for property taxes, insurance, and HOA dues and fees.
• The borrower must participate in the consumer information session conducted by a HUD-approved HECM counselor

Property Requirements

The property types eligible for reverse mortgage loans must meet FHA property standards and flood requirements. Eligible properties include:

• Single-family home or a two to four-unit home with one unit belonging to and occupied by the borrower
• HUD-approved condominium project
• Individual condominium units meeting FHA Single Unit Approved requirements
• Manufactured homes meeting FHA requirements

Mortgage Amount and Interest

Under the HECM program, interest rates are usually based on the current rate. The valuation of the property can be the appraised value of the home, the HECM FHA limit, or the selling price, whichever is lower.

HECM Costs

You can finance costs associated with the HECM through the loan. However, that would mean lesser net proceeds. HECM has several fees that you are required to pay. These are:

• Initial mortgage insurance premium (MIP) of 2% at closing and 0.5% MIP annually over the life of the loan. The annual MIP will be based on the outstanding balance of the loan.
• Third-party charges, including appraisal fees, title search and insurance, surveys, inspections, mortgage taxes, and other fees.
• A loan origination fee capped at $6,000.
• Servicing fees for the life of the HECM.

Apply for Reverse Mortgage Today

Home Equity Conversion Mortgage programs in Tacoma can only be complicated with proper guidance. Let us help you cut through the noise and obtain the funding you need from your home’s equity. Capital Home Mortgage is committed to providing our clients an enjoyable loan process, with low fees and quick actual approvals. 

Call (253) 528-4417 to speak with our loan officers about your Tacoma reverse mortgage needs.