Seniors in Los Angeles, beware of the risks associated with reverse mortgages. Educate yourself before making any financial decisions today.

senior with cash

Like any other important financial decision, choosing to take out a reverse mortgage comes with potential risks as well as potential benefits. You have may have built up a lot of equity in your home in the Los Angeles area. In this case, you can have several choices in reverse mortgage. It’s important to understand your options and the risks that could be involved with a reverse mortgage to make the choices that are right for you.

Reverse Mortgages Use Your Home’s Equity

How much is your paid-off or nearly paid-off home worth? This is the equity in your home. In a high-cost area like Los Angeles County, home values can mean you have much more equity in your home than your original home mortgage amount.

As a result, one important thing to remember about reverse mortgages is that they use the equity that you have built up in your home. You have the potential to tap into a significant amount of equity through a reverse mortgage.

You can invest the funds from a reverse mortgage, or you can use them to pay for living costs. However, using your home’s equity through a reverse mortgage means that the equity could be at-risk.

Considerations of Risk With Reverse Mortgages

With a reverse mortgage, you continue to own your home. That means that you remain responsible for property tax, maintenance costs, upkeep of the home, and homeowners’ insurance.

Reverse mortgages are also intended for primary residences.
If you move away for a long period of time, the lender could foreclose on the mortgage. They could also foreclose if you do not pay for homeowner’s insurance or property taxes.

According to the National Council on Aging, some homeowners have also lost their homes because they failed to meet Federal Housing Administration (FHA) requirements for home maintenance. 

Using A HECM (Home Equity Conversion Mortgage)

An HECM is a specialized type of reverse mortgage that is available for adults over age 62. This type of mortgage is issued by lenders who have been approved by the Federal Housing Administration (FHA). 

The FHA has established regulations for HECM mortgages which are intended to protect you, the borrower, as well as the lender. People who apply for an HECM mortgage must complete a counseling course with an agency approved by the U.S. Department of Housing & Urban Development (HUD). The course explains the benefits and potential risks of an HECM mortgage for older adults.An experienced mortgage broker can explain the reverse mortgage process to you. They can also link you with an FHA-approved HECM lender. They can guide you through the HUD counseling process and explain the risks involved in a reverse mortgage.Contact California Platinum Loans today to learn more.

Sources:

Mohr, Angie. “The Dangers of a Reverse Mortgage,” Investopedia, 30 May 2022,

National Council on Aging, “A Guide to Reverse Mortgages for Older Adults,” 6 March 2022,

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2023 Mortgage Rate Trends: Expert Predictions on 30-Year Fixed & ARM Rates and What Does It Mean for Your Home Loan?

2023_Mortgage_Rate

Each year, various finance industries, real estate professional associations, and government-backed organizations like Freddie Mac predict mortgage interest rate trends. These predictions sometimes differ, and there’s no guarantee that they will be accurate. However, February is the time of the year when these mortgage rate predictions tend to solidify, and different experts weigh in. Current forecasts on mortgage rates vary between 5% and 7% for 2023, depending on the expert source. When interest rates go down, the housing market tends to heat up, so if you’re in the market to buy a home or refinance in 2023, it’s a good idea to keep an eye on trends in mortgage rates.

Encouraging Mortgage Rate Forecasts

Some mortgage rate predictions show an encouraging trend of lower or steady mortgage interest rates for 2023. 

First, Compass, Inc.’s Regional President Neda Navab predicts that mortgage rates are at or near their peak as of the beginning of 2023 and could be around 5% by the end of the year, thanks to the slowdown in inflation and lower U.S. Treasury bond yields that impact mortgage rates.

Another prediction from the Mortgage Bankers Association (MBA) says that “long-term rates have already peaked.” The MBA says that mortgage rates will end the year at a precise 5.2%. The MBA comprises of industry leaders, direct experts, and the leading power players originating the loans, making their predictions carry a lot of weight.

Less Optimistic Mortgage Rate Forecasts

Freddie Mac, one of the two government-sponsored home mortgage enterprises, and Fannie Mae predict that the average 30-year mortgage rate will be 6.6% at the beginning of 2023 and end the year at about 6.2%, an entire point higher than the Mortgage Banking Association.

An economist with Realtor.com, Jiayi Xu, predicts that ongoing inflation will keep mortgage rates in the 6% to 7% range in 2023. 

The National Association of Realtors (NAR)’s senior economist Nadia Evangelou says that mortgage rates could end 2023 at slightly under 6% as long as inflation continues to slow down.

Adjustable rate mortgages (ARMS) offer lower interest rates than fixed-rate mortgages. Working with an experienced broker like California Platinum Realty and Loans can provide you with more choices in a mortgage that can fit your financial goals and objectives, along with delivering a home purchase loan or a refinance. Contact California Platinum Loans to discuss your options in home mortgages today.

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Navigate the Complex Mortgage Home Loan Process Like a Pro: Don’t Do it Alone! Business Owners, Entrepreneurs, and Self-Employed Individuals All Trust California Platinum Loans to Guide them Every Day!

Home Loans for Self-Employed

Buying a home is a significant acquisition that can be more challenging for self-employed individuals and business owners to secure a home loan. Fortunately, several loan products are available to help them navigate the mortgage process and achieve their dream of home ownership.

Types of Home Loans for Self-Employed Individuals and Business Owners

Self-Employed Borrower Home Loan

A Self-Employed Borrower Home Loan is a home loan designed for self-employed individuals who need help meeting traditional loan income verification requirements. This loan product requires documentation such as tax returns and financial statements to verify the borrower’s income. The loan amount that can be borrowed will depend on the borrower’s income, credit score, and other economic factors. Self-Employed Borrower Home Loans typically have more flexible income verification requirements, lower credit score requirements, and lower down payment options than traditional loans, making it easier for self-employed individuals to qualify for a home loan.

No Income Verification Loan

A No Income Verification Loan is a type of home loan that does not require income documentation to be provided by the borrower. Instead, the loan approval is based on the borrower’s credit score and the value of the property being purchased. This loan product is typically used by self-employed individuals or those with irregular income who find it challenging to provide sufficient income documentation to qualify for a traditional loan. No Income Verification Loans may have higher interest rates and stricter qualifications than conventional loans due to the lack of income documentation. However, they offer a more straightforward application process and a faster approval time.

Stated Income Loan

A Stated Income Loan is a type of home loan that allows the borrower to state their income on the loan application without providing any income documentation to verify it. The loan approval is based on the borrower’s credit score and the value of the property being purchased. Stated Income Loans are typically used by self-employed individuals or those with irregular income who have difficulty providing sufficient documentation to qualify for a traditional loan. These loans are also known as “liar loans” since borrowers could overstate their income, making them riskier for lenders. Due to this higher risk, Stated Income Loans may have higher interest rates and stricter qualifications than traditional loans. However, they offer a more straightforward application process and a faster approval time.

Business for Self Loan

A Business Self Loan is a home loan designed for small business owners. This loan product is based on the borrower’s credit score and personal and business income. It allows self-employed individuals to use their business income as a source of income to qualify for the loan. The loan amount that can be borrowed will depend on the borrower’s business income, personal income, and credit score. Businesses for Self Loans typically have more flexible income verification requirements, lower credit score requirements, and lower down payment options than traditional loans, making it easier for small business owners to qualify for a home loan.

No Doc Loan

A No Doc Loan is a home loan that does not require any income or asset documentation from the borrower. The loan approval is based solely on the borrower’s credit score and the value of the property being purchased. No Doc Loans are typically used by self-employed individuals or those with irregular income who have difficulty providing sufficient documentation to qualify for a traditional loan. These loans are considered high-risk due to the lack of income documentation and contributed to the 2008 financial crisis. As a result, No Doc Loans are now more prevalent than they once were and may be harder to find. They may have higher interest rates and stricter qualifications than traditional loans if available due to their higher-risk nature.

Benefits of These Loan Products

One of the key features of these loan products is that they have more flexible income verification requirements, lower credit score requirements, and lower down payment options. These features make it easier for self-employed individuals and business owners to qualify for a home loan.

Consult a Financial Adviser or Mortgage Broker

Notably, these loans may have higher interest rates and stricter qualifications than traditional ones. Therefore, it is always good to consult a financial advisor or mortgage broker before making decisions.

Self-employed individuals and business owners have several loan products available to help them navigate the mortgage process and secure financing. These loan products include self-employed borrower home loans, no income verification loan

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