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Reverse Mortgage Loan

The reverse loan is for seniors ages 62 and older. It allows homeowners to convert their home equity into cash without the monthly payments.

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Reverse Mortgages

Reverse Mortgage – Is the Right Loan for You?

At Sprint Funding, we provide a simple, competitively-priced approach to loans backed by experienced brokers who care about getting you the best deal.

Why Work With Sprint Funding

Looking for an attentive team that can help you with your borrowing needs? Sprint Funding is the right partner for you.

Our happy and satisfied clients love our prompt services to help them with their loans. We look forward to extending you the same level of excellent customer service.

What is a Reverse Mortgage Loan?

Reverse Mortgage - Sprint FundingA reverse mortgage loan is a money you can borrow against your home. It is called a reverse mortgage because it is essentially a mortgage in reverse.

You can take the home equity you have built up and turn it into cash or a line of credit.

Unlike a traditional mortgage, one that you may have used to buy your home, you do not need to make loan payments with a reverse mortgage.

With a reverse mortgage, you continue to maintain ownership of your home.

While a reverse mortgage is similar to a home equity line of credit (HELOC), it is specifically designed for a homeowner who is 62 or older.

The amount you can borrow is a percentage of the value of your home. The precise percentage depends on your age, the value of your home, and the risk profile of your lender.

How Much Money Can I Borrow?

The limit on the amount borrowed depends on

  • the type of reverse mortgage
  • the value of the home
  • whether you have an existing outstanding mortgage on your home
  • the age of the borrower
  • the current mortgage interest rate in the market

If you are looking for a federally-insured reverse mortgage, the maximum limit on the amount for 2020 is $765,600.

If you are looking to borrow into the millions, a proprietary reverse mortgage can help you.

Advantages and Disadvantages of a Reverse Annuity Mortgage

Before discussing how a reverse mortgage could be better than a traditional mortgage for your needs, let’s first summarise the similarities between the two products.

In both a reverse mortgage and a traditional mortgage,

  • You must continue to pay your property taxes and homeowners insurance
  • You are responsible for home improvements and repairs
  • Your finances will be assessed before any loan can be approved
  • You pay for costs such as Title Searches, Inspection Fees, Name Searches, etc

So what makes reverse annuity mortgages so attractive?

One of the primary reasons is that you do not pay monthly mortgage payments as long as you live in your home.

Here are some of the other reasons people obtain reverse mortgage loans:

  • 62 and older, and want to enjoy retirement. A traditional loan that requires proof of income may not be an option
  • The total amount you or your heirs owe does not exceed the value of your home
  • You can continue living in your home, and retain ownership of your home
  • You may not have to repay the loan until you decide to sell the home

There are some things to think about with a reverse mortgage.

  • Sometimes, fees such as closing costs and the interest rate may be on par or higher than with a regular loan
  • Your heirs will have to pay off the loan balance to have full equity in your home

An experienced loan officer can help identify the most cost-effective reverse mortgage product for your needs.

Types of Reverse Mortgages

There are three types of reverse mortgages: Home Equity Conversion Mortgages, Single-purpose reverse mortgages, and Proprietary reverse mortgages.

Each one has unique features, and a loan officer could help you identify the one that works best for your needs.

Home Equity Conversion Mortgages (HECMs)

Sprint Funding - Reverse Mortgage LoanThe most common reverse mortgage you have available as an option is a Home Equity Conversion Mortgage (HECM).

A mortgage HECM is a reverse mortgage that allows you to take the equity in your home and turn it into cash in a lump sum or a line of credit without monthly payments.

This mortgage is available through the Federal Housing Administration and is insured by the Department of Housing and Urban Development (HUD).

A Home Equity Conversion Mortgage is the only government-insured reverse mortgage and is only available from HUD-approved lenders.

Is an HECM for me?

  • Federally-insured mortgage for the peace of mind
  • Mandatory counseling with an approved counselor to help you make an informed decision

Single-Purpose Reverse Mortgages

If you have a specific goal for your borrowing, a single-purpose reverse mortgage could be your best bet.

As the name suggests, these mortgages can only be used for one purpose and no other.

This purpose is a lender-approved expense, and could be a home renovation project, or to pay property taxes.

Because single-purpose reverse mortgages only claw into a small portion of your home’s equity, it is a less risky loan for the lender.

As a result, these mortgages can be a cost-effective option. There are usually minimal to no fees on these loans, and the interest rates are low.

Why go with a single-purpose reverse mortgage?

  • Low-cost option for a reverse mortgage
  • In most cases, no repayment as long as you live in your home

Proprietary Reverse Mortgages

If you are looking for a bigger loan amount than what you can get from a Home Equity Conversion Mortgage, proprietary reverse mortgages may be for you.

A proprietary or jumbo reverse mortgage lets you borrow money against your home through a private lender.

Unlike single-purpose reverse mortgages, you can use this money for any purpose.

The amount of money you can get from a proprietary reverse mortgage is dependent on how much of a risk your lender is willing to take.

The advantage of these loans is that there usually is no monthly mortgage insurance premiums to be paid or upfront fees.

Is a proprietary reverse mortgage right for me?

  • Access to more money than with single-purpose reverse mortgage or HECM
  • No monthly premiums or upfront fees

Am I Eligible for a Reverse Mortgage?

Considering any of the three reverse mortgage options above? Here is a basic eligibility checklist.

  • You or your borrowing spouse must be at least 62 years old
  • The home against which you obtain a reverse mortgage must be the one that you reside in
  • You must either own your home outright, or have a remaining mortgage which can be paid off with a reverse mortgage

With the HECM, there are additional eligibility requirements:

  • The property must be a single-family home, a condominium approved by the Federal Housing Administration (FHA), a townhouse, or a 2- to the 4-unit property where you occupy one unit
  • You must meet an HUD-approved counselor to understand your reverse mortgage process and loan terms

How to Choose a Reverse Mortgage Lender

If you have decided that a reverse mortgage is what you need and you meet the eligibility requirements, the next step is deciding on a lender.

You are faced with a wide range of possible lenders and mortgage brokers. You may have heard of one from friends, another one off of a billboard. Fortunately, there are a number of factors that you can use to decide on your mortgage broker.

A Trusted Mortgage Broker

Reverse Mortgage Lenders - Sprint FundingThe first is to ensure you’re working with a reputable professional. Is the broker experienced, and has the broker been able to get results for their clients consistently?

When you work with a certified mortgage broker, you are assured of working with someone who is knowledgeable about the most recent policies and rules.

With limits and regulations changing every year, a trusted loan officer can help you identify the best reverse mortgage product for your needs.

 

Experience with Reverse Mortgages

The second is to identify the depth of experience your broker has with reverse mortgages.

A mortgage firm with 30+ years of general experience may not be able to provide you with the subject-specific experience that someone who has a track record in reverse mortgages.

This seemingly small detail can make a difference in tens of thousands of dollars in incurred fees and payments.

The Best Reverse Mortgage Loans come with Top Customer Service

Finally, and most importantly, does working with the mortgage broker make sense to you? Are you being presented with credible facts and a realistic timeline?

These are some of the questions that are worthy of consideration.

A reverse mortgage can be a considerable amount of money and working with the right mortgage broker can save you from hidden surprises later on.

Getting a Mortgage Loan from Sprint Funding

After decades of hard work, paying off your home mortgage, a reverse mortgage can help you live the life you worked for. The same home that you paid off could now help you retire comfortably.

We have helped Californians use a reverse mortgage to realize a comfortable retirement.
For more information and to understand which reverse mortgage product can work best for you, contact us today.


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