Guidance for San Diego Reverse Mortgages

Most federally insured Home Equity Conversion Mortgages (HECMs) require every borrower to be age 62 or older, occupy the property as a principal residence, and have sufficient equity or funds to satisfy existing mortgage debt at closing. Applicants also complete a financial assessment and HUD-approved counseling. Eligible property types and loan limits apply, so a review of your specific home and finances is essential.

Reverse mortgage costs can include an origination fee, appraisal, title and escrow charges, recording fees, counseling, closing costs, mortgage insurance for HECM loans, and ongoing servicing charges. For a HECM, the FHA upfront mortgage insurance premium is generally 2% of the maximum claim amount; origination fees are federally capped. Actual totals vary by home value, lender, and California closing charges, so compare a Loan Estimate carefully.

A reverse mortgage lets eligible homeowners convert part of their home equity into proceeds through a lump sum, line of credit, monthly payments, or a combination. The borrower keeps title and remains responsible for property taxes, homeowners insurance, home maintenance, and living in the home as a primary residence. The loan generally becomes due when the last borrower permanently leaves the property, sells it, or dies.

Yes. With a reverse mortgage, you retain ownership and title to your home. However, you must continue to occupy the San Diego property as your primary residence, maintain it, pay property taxes and homeowners insurance, and meet other loan obligations. Failing to meet these requirements can cause the loan to become due and payable. A clear budget review helps confirm that these ongoing responsibilities are manageable.

Often, yes, provided the reverse mortgage proceeds are sufficient to pay off the existing mortgage and any required liens at closing. You may use available funds, called a set-aside or cash contribution, if needed to close the gap. The amount available depends on the youngest borrower’s age, current interest rates, the home’s value, and applicable lending limits.

The available principal limit is determined by the youngest borrower’s age, the home’s appraised value, current interest rates, and the applicable HECM lending limit or proprietary loan guidelines. Generally, older borrowers, lower expected rates, and higher eligible property values can increase available proceeds. Existing mortgage balances, closing costs, and required set-asides reduce the net funds you can access.

For an FHA-insured HECM reverse mortgage, the loan is non-recourse. When the loan becomes due, heirs can sell the home, repay the balance to keep it, or transfer the property to the lender. They generally do not owe more than the home’s appraised value at the time of repayment, even if the loan balance is higher, provided loan requirements have been met.

Compare the lender’s margin and interest-rate options, origination and third-party closing costs, servicing fees, available payment plans, counseling requirements, and projected loan balance over time. Ask how existing liens will be paid, what ongoing obligations you must meet, and whether a fixed-rate or adjustable-rate option fits your goals. Reviewing the Loan Estimate side by side makes costs and terms easier to understand.