ARAMCO Report - The Mother of ALL Mortgage Blogs!

San Diego senior population expected to double by 2030

Posted by Mehran Aram on Fri, Sep 6, 2019 @ 08:09 AM

There were approximately 375,000 senior citizens living in San Diego County as of 2015, according to San Diego Magazine – a figure that is expected to double to 724,000 over the next 12 years. While this is hardly surprising given San Diego’s status as one of the top places to retire, it presents challenges for those living on a fixed income.

San Diego is one of the most expensive housing markets in the nation with average home prices topping well over $500,000. Yet, social security income for a single retiree in San Diego is less than $20,000 per year.

Fortunately, those looking to relocate to San Diego in their golden years may find benefit in a H4P or HECM for Purchase. H4P is a type of home loan that is insured by the FHA and provides those 62 or older an opportunity to combine their down payment with loan proceeds from a reverse mortgage. Most appealing is that the loan requires no monthly mortgage payment.

Today, conventional conforming no-point 30-year fixed mortgage rates are averaging 3.625 percent and 15-year rates are near 3.125 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: Reverse Mortgage, San Diego County, senior citizen, Retirement, Seniors, Reverse Mortgage for Purchase, Mortgage rates, HECM for Purchase, San Diego Housing Market, San Diego Housing, Fixed Income, H4P

San Diego is a retirement hot spot

Posted by Mehran Aram on Sun, Apr 14, 2019 @ 08:04 AM

If you’re looking for moderate weather year-round, pristine beaches and the flexibility of a suburban life with a little urban thrill nearby, San Diego is an ideal place to retire in. This is why millions of retirees are making San Diego their new home. In fact, according to a new report, the city ranks number 14 nationwide of best places to retire.

One of the drawbacks may be San Diego’s cost for housing but experts are quick to point out that for seniors, this may not necessarily be a deal breaker. Powerful financial tools like a HECM for Purchase (H4P) eliminate the cost barrier to buying a home. H4P is a home loan insured by the Federal Housing Administration that allows those 62 or older to combine their down payment with loan proceeds from a reverse mortgage.

Launched in 2008 by the FHA, H4P is easier to qualify than a conventional loan and can be used for the purchase of a single-family home, townhome and FHA-approved condominiums. Most appealing is that they loan requires no monthly mortgage payment and can help free up much needed cash in retirement.

Today, conforming no-point 30-year fixed mortgage rates are averaging 4.125 percent, 15-year rates are near 3.625 percent and the 5-year ARM is averaging 4.00 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Topics: Reverse Mortgage, HECM, San Diego, Retirement, Reverse Mortgage for Purchase, HECM for Purchase, San Diego Housing Market

Is a Reverse Mortgage the Right Financing Plan for Your New Home?

Posted by The Aramco Group on Wed, Mar 21, 2018 @ 09:03 AM

Keys in a door handle with a keychain that looks like a home.

As you enter your golden years, you may be considering buying a new home. Many seniors look to purchase a new home during retirement, whether in order to right-size their lifestyle, live closer to family and friends, decrease the financial burden of their current home, or to move to a warmer climate.

For some, it makes sense to take advantage of using a reverse mortgage to finance a new home — this is known as a reverse mortgage for purchase (or, HECM for purchase). Read on to find out how the process works and whether it may be the right strategy for you to move into a home you love.

History of the Reverse Mortgage for Purchase

Prior to 2008, a senior who wanted to leverage a reverse mortgage to purchase a home would have to use a conventional mortgage to finance the purchase, then repay that mortgage using a reverse mortgage. For many, this meant that insufficient credit documentation or income would prevent the purchase of a dream home. That changed in 2008, when Congress authorized a program known as HECM for Purchase, which enables seniors to take out a reverse mortgage in order to purchase a new  home. This program not only allows seniors to sidestep the qualifications for conventional mortgages, but also condenses costs to just one loan.

Before you choose this strategy to finance your next home, you should understand the requirements and expectations associated with HECM reverse mortgages.

Qualifications and Eligibility

To qualify for HECM for Purchase, you must be 62 years or older, with no outstanding federal debt in delinquency, and the home you wish to purchase must be your principal residence.

As for the type of home you’re buying, HECM for Purchase applies to:

  • single-family homes
  • two- to four-unit homes with at least one unit occupied by you
  • U.S. Department of Housing and Urban Development-approved condominiums
  • federally approved manufactured homes

A recently passed law allows lenders to take applications for new-construction homes prior to certification of occupancy. All of the above properties must also pass federal standards and flood requirements.

Using a Reverse Mortgage for Purchase

One of the primary benefits of a reverse mortgage is that it gives you the option of choosing your monthly mortgage payments or making no monthly payments at all. In fact, the lender pays you (up to a predetermined percentage of your new home’s total value), either in a lump sum or as a line of credit. Many people prefer the line of credit to avoid the temptation of spending all the money at once.

When you die or move again to another home, the amount given to you from the lender becomes due, and your heirs will inherit the remaining equity after interest and fees when you sell your home. In theory, you could also live in this home long enough that once your estate sells the home there would be no equity left after paying off the lender. While this doesn’t happen often, it explains the need for FHA mortgage insurance, which protects you and your heirs from ever owing more than the sale price of the home.

A reverse mortgage will cover anywhere from around 38-71% of a new home’s purchase price; the remaining balance must be paid from the sale of your previous home, or from another source of income or savings. The amount the HECM for Purchase covers will vary from person to person, based on age, current interest rates, and the appraised value of the new home.

As with many other loan programs, borrowers can choose between a fixed rate and an adjustable rate. The former is a known quantity; the latter often starts at a lower interest rate than the fixed-rate offering, but is the only reverse mortgage program that allows for the line of credit feature.*

You should always speak to a professional to understand the options available to you and the requirements for your unique situation. A reverse mortgage can offer an affordable strategy to finance the purchase of your next home and ensure you can live out the rest of your golden years right where you want to be.

To learn more about the reverse mortgage for purchase, and whether it’s the right strategy for you, contact our knowledgeable team at ARAMCO.

Topics: new home sales, Reverse Mortgage for Purchase, financing

Buying a New Home with a Reverse Mortgage

Posted by The Aramco Group on Thu, Apr 23, 2015 @ 13:04 PM

Did you know there is a way to buy a home and never make a mortgage payment?

Imagine this scenario:

You have $200,000 and you are looking for the perfect home that suits your retirement.

You are looking forward to buying your next home outright because you have spent a lifetime making monthly mortgage payments and to continue to would be a drag.

You are scared that $200,000 is not enough to find a home in San Diego.

You and your spouse engage a realtor, and look around the San Diego area for a perfect home or condominium, and you are disappointed that you cannot find any homes that…

1) Suit your family’s needs,

2) Are in your price range, and

3) Are in the neighborhood you want them to be.

Is this home the right size?

What are you to do?

Consider a using a reverse mortgage as a tool to get the right home.

If you or your loved one are over the age of 62, then you might qualify for a Reverse Mortgage for Purchase. It could expand your buying power and you still won’t have to make mortgage payments — if you do not want to!

The loan amount one can qualify for with a Reverse Mortgage for Purchase is based on the age of the youngest borrower. If the youngest borrower is 62 or over, then the loan can be the lesser of 52% the home’s appraisal value, the purchase price or the maximum lending limit.

Let’s go back to our situation where you and your spouse have $200,000 and are looking for the perfect San Diego home to right-size into retirement. If you and your loved one are 62 and qualify for a reverse mortgage, then 52% of the appraised value of the home you find can be covered by the reverse mortgage! 

You find the perfect home for $390,000. You could never afford it without a loan (or a winning lotto ticket), but with your reverse mortgage covering 52% ($202,800) now you can use $187,200 of your money to buy a home worth nearly twice as much as you could have purchased in cash.

Even better: the Reverse Mortgage for Purchase works just like a normal Reverse Mortgage. You retain the title to the home, and the loan does not come due until the last borrower leaves the home. The loan is non-recourse, so the bank can never come after you, your heirs or your estate regardless of what happens in the housing market.

You got everything that you set out to accomplish: you found a home that…

  • Suits your family’s needs,
  • Is in the right neighborhood,
  • Requires NO monthly mortgage payments,
  • And was within reach of your original budget!

You got everything you were looking for with the help of a reverse mortgage!

Look around you for a moment, and try to see the nooks and crannies of your home in a new light. Would you like to spend your future in a home that is better suited to your needs? If so, call ARAMCO Financial at (760) 438 – 2552 to see if a Reverse Mortgage for Purchase is right for you. Or sign up for our free educational workshop at www.ARAMCO.biz.

Don’t just downsize, right-size with a reverse mortgage!

Topics: Reverse Mortgage, HECM, home prices, home purchase, San Diego, purchase, Price, Reverse Mortgage for Purchase, Home Purchasing, HECM for Purchase