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Reverse Mortgages in California

California Reverse MortgageThe amount of residents in California choosing to obtain a reverse mortgage is growing rapidly (increased 6.7% in 2011 alone). Recent census information shows an average 60% qualification rate for FHA and non-FHA loans collectively because more and more seniors in California are living longer and maintaining solid equity in there estates. Due to the fact that home values are typically higher compared to those of other states, California residents have the option to take out a non-FHA reverse mortgage loan; also known as a proprietary California reverse mortgage.

Funded from a traditional mortgage lender rather than the government, proprietary California reverse mortgage programs are similar to FHA loan proceedings. However, a proprietary California reverse mortgage carries a home value limit of $5,000,000, while FHA loans are limited to homes valued at or below $625,000. This results in a more conservative loan to value ration and divides people into two groups, those whose homes are valued above $800,000 and those whose homes are valued below $800,000. People below the 800K mark typically benefit from a normal FHA reverse mortgage because they typically pay off at a higher rate.

For those with appraisals above 800K, the higher limit in the proprietary program offers more money than a normal FHA, because it covers the conservative loan to value ratio. However, each individual loan is unique and home values do not determine everything in a reverse mortgage.

There are roughly 4 million senior residents in California and about 13 million homes in total, so many Californians could take advantage of this great opportunity.

The CA Reverse Mortgage Process:

Applying for a reverse mortgage in California is typically very similar to the application in other states. After meeting with a California HECM approved counselor, potential borrowers need to provide validated accounts of homeowners insurance, recent property tax bill, and statements of any existing mortgages. After you've done your part, the lender prepares the necessary documents to initiate the loan.

Next comes certified counseling required by the federal government. Upon completion, applicants are then assigned to an appraiser and given a case number by either the HUD or FHA. On average, the application goes full cycle after a period of 30 days on average, and the loan is closed.