Unlock the Power of Home Equity with a HECM Loan! Learn how this financial tool can help seniors live a more comfortable retirement.

Unlock the Power of Home Equity

A HECM loan is a “home equity conversion mortgage.” This is a government-insured mortgage that is only available for homeowners who are age 62 or older.

HECM loans are insured by the Federal Housing Administration (FHA). FHA-approved lenders only offer them. 

HECM loans are reverse mortgages. They allow older homeowners to withdraw a portion of their home’s equity for living expenses or other needs.

How Are HECM Loans Different From Other Reverse Mortgages?

HECM loans are government-insured. Other reverse mortgages aren’t.

HECM loans also include protections for borrowers. They also have requirements for borrowers that other reverse mortgages don’t. Borrowers for HECM loans need to be:

  • 62 years old or older
  • Own their property outright (or paid down a lot of equity)
  • Live in the home as a primary residence
  • Not have any federal debt (like unpaid income tax)
  • Be able to pay property tax

What Are Other Requirements For HECM Loans?

HECM loans need to meet all flood requirements and FHA property standards. Only single-family homes or 2-4 unit properties can qualify.

If you have a condo, it needs to qualify for HUD approval for the loan. Condo units also need to meet FHA single-unit approval standards. Some manufactured homes may also qualify for a HECM loan, as long as the home meets FHA standards.

How Does The HECM Loan Pay The Borrower?

As a reverse mortgage, the HECM loan pays income to the borrower. There are five options for how the funds from the loan can be paid or used:

  • Equal monthly payments: as long as one borrower is alive.
  • Term payments: equal monthly payments for a fixed term.
  • Line of credit: unscheduled payments, made on request of the borrower.
  • Modified tenure: a combination of equal monthly payments and a line of credit as long as one borrower is alive.
  • Modified term: A combination of equal monthly payments and a line of credit for a fixed term.

HECM mortgages can help older homeowners to stay in their homes and live comfortably. You need to complete a HUD-approved counseling course to receive the loan. If you are looking into reverse mortgages, contact California Platinum Loans to speak with their qualified, experienced staff. They can explain how this FHA-insured mortgage program works in detail.

Sources: U.S. Department of Housing & Urban Development, “How the HECM Program Works,” URL:

Maximize Your Home-Buying Power in LA: A Complete Guide to Choosing the Right FHA Loan Terms – 15-Year VS 30-Year Options & Pros/Cons!

Maximize Your Home-Buying Power in LA A Complete Guide to Choosing the Right FHA Loan Terms 15Year vs 30Year Options ProsCons2

Could you get an FHA 15-year or 30-year mortgage to buy a home in Los Angeles? According to the Department of Housing and Urban Development (HUD), as of 2021, 10.85% of home purchase loans nationwide were FHA loans. And about 4.83% of home refinancing loans in 2021 were FHA loans. 

The number of people using FHA loans to buy or refinance a home is going up: during the third quarter of 2022, 12.45% of home purchase loans were FHA loans, along with 12.17% of refinances.

Pros and Cons Of Different FHA Loan Terms

FHA loans can be offered to borrowers with lower credit scores and come in 15-year and 30-year terms. Both 30-year and 15-year FHA loans can provide up to $1,089,300 for a single-family home and up to $2,095,200 for a 4-unit property. So, then what may you ask are the pros and cons of 15-year FHA home loans and 30-year FHA home mortgages?

FHA 15-Year Mortgage Advantages

Borrowers who take out 15-year mortgages pay less interest over the term of their loan than borrowers with longer loan terms. One option for some buyers is to take out a 30-year mortgage and then refinance into a 15-year mortgage to reduce interest costs and increase the amount of equity they have in their home. 

FHA 15-Year mortgages are available and can be a good option for buyers who want to pay their mortgage off in half the time of a traditional, 30-year mortgage term.

FHA 30-Year Mortgage Advantages

FHA loans are available for borrowers with lower credit scores or a short credit history. They also have more lenient debt-to-income (DTI) ratios than conventional home mortgages. An FHA home loan can help some borrowers buy a property they otherwise couldn’t afford due to the lack of a high down payment or a DTI ratio that doesn’t meet conventional mortgage criteria. Because Los Angeles County has increased home prices, FHA loans are available for over $1 million.

Downsides of FHA Loans

FHA loans can come with higher closing costs than conventional loans. They also require mortgage insurance premiums (MIP). FHA loans also require appraisals that ensure the property meets government standards to qualify for the loan.

Contact the experts at California Platinum Loans today and learn whether an FHA loan is right for you or whether you will benefit more from a traditional conventional loan or a non-qualified mortgage loan as a self-employed entrepreneur or business owner.

Housing market is beginning to show signs of affordability returning in November Mortgage Refinance Demand Surged 6%

signs of affordability

First Indications of Affordability Emerged in November

The market is beginning to show signs of affordability returning. As mortgage rates declined in November and rents decreased by the most in at least seven years, the cost of a new mortgage decreased by 4.8%.

According to Zillow’s most recent Market Report, housing market activity has been at its most relaxed since the epidemic started. According to the data, a typical U.S. home’s monthly mortgage payment decreased by around $100 due to falling home values and lower mortgage rates.

It’s “unlikely affordability will significantly improve anytime soon,” according to Zillow, but the news from November is encouraging because it suggests that affordability may stabilize in 2023.

Housing Market Shows Signs of Balancing

The housing market is regaining equilibrium as buyers and sellers are on more equal footing at the current time. Neither buyers nor sellers appear to have the upper hand in negotiations. The November RE/MAX National Housing Report supports that. In the 53 surveyed metro areas, the data showed prices moderating and a 12% decrease in home sales from October’s figures.

The number of new listings fell to its lowest level of the year, down 21.4% from October. Also, houses for sale remain on the market for an average of 39 days. That was a full week more than November 2021 and four more days than October. The median sales price fell to $394,000, a 1.3% decrease from October but a 3.7% increase from November 2021.

According to the report, November’s inventory had a 2.5-month supply, up from 2.3 in October and more than double the 1.2 from a year earlier. The close-to-list price ratio was 98% on average in November, meaning residences typically sold for 2% less than the asking price. The percentage is unchanged from October 2022 and was 101% a year ago.

Mortgage Refinance Demand Surged 6%

While the latest decline in mortgage interest rates did little to increase demand from homebuyers, it prompted some homeowners to explore ways to reduce their monthly payments.

The Mortgage Bankers Association‘s seasonally adjusted index shows that the number of applications to refinance a mortgage increased by 6% last week compared to the week before. However, volume was still 85% lower than it was during the same period the previous year.

The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the U.S. is likely to enter a recession,” said Mike Fratantoni, MBA’s chief economist. “However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.”

Next week’s potential market-moving reports are:

  • Monday, December 26th – No Report
  • Tuesday, December 27th – US Home Price Index (SAAR)
  • Wednesday, December 28th – Pending Home Sales Index
  • Thursday, December 29th– – Initial and Continuing Jobless Claims
  • Friday, December 30th – Chicago PMI

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.