San Diego Reverse Mortgages Take A Hit

A new guideline was released last week that affects senior homeowners who are considering a reverse mortgage on their home in San Diego. The rule was issued by a major reverse mortgage lender and was prompted by events taking place in San Diego and many other parts of the country. As if the recent fires were not enough, now San Diego homeowners are faced with a new affront to their home ownership: declining home equity.

San Diego has seen many years of rapidly rising home values, but now the boom in values has come to end. Most residents of California are seeing the value of their homes and other real estate holding drop. A critical corner was turned in the supply and demand of homes when prospective home buyers realized that $500,000 for a three bedroom, two bath houses in an average San Diego neighborhood just did not make sense. Given that the cost to rent a comparable home would be at least $1000 less per month less than a mortgage on the same house, many people began taking the rental alternative. Investors who speculated on the rise in home values also took notice that the returns on their investments would evaporate as soon as home value slowed. When both of these groups started waking up to these realities, San Diego area home prices started to slow their growth.

The growth, as most people now realize, has reversed itself into a decline. Now that the decline in home prices is well established, lenders, including those a major lender who offers reverse mortgages in San Diego, have begun to take action. For the San Diego Metropolitan Statistical Area (MSA) that includes the whole county (up to Oceanside, San Marcos and Vista), this reverse mortgage lender is now requiring that the principle limit be automatically reduced by 6%.

The principle limit on a reverse mortgage is the amount of money that that a lender is will to lend to a senior homeowner in cash up front. The homeowner does not have to take the full amount in cash, but may choose to leave all of it, or some partition thereof, in a line of credit. The principle limit on a reverse mortgage does not include the future interest that will accrue on the loan balance.

The move by this major reverse mortgage lender could pave the way for other reverse mortgage lenders to make similar moves for San Diego. The lender in question dominates the reverse mortgage market in San Diego and California, so many senior homeowners may be caught unaware that there are currently other choices for reverse mortgages that do not arbitrarily reduce the principle limit. It is important for those seniors who are considering a reverse mortgage in San Diego to seek out the guidance from a correspondent lender who offers every program available.

By: Luke Helm

Article Directory: http://www.articledashboard.com

Reverse-Mortgage-Info.net is a division of FutureSafe Financial. We specialize in California reverse mortgages and provide qualified San Diego reverse mortgages for seniors 62 years and older. Please contact us for more information and a free reverse mortgage quote.