LA County Information

County of Los Angeles
Department of Consumer Affairs
Information Sheet

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Reverse Mortgages

Reverse mortgages are for senior citizens who own homes and want monthly income. 

Who Qualifies?

You must be at least 62 years old and have equity in your home.

You have equity in your home if your home is worth more than you owe on it. 

Here’s How It Works

When you bought your home, the bank loaned you the money to buy it and you paid them back with monthly mortgage payments.

A reverse mortgage is the opposite.  With a reverse mortgage, the bank pays you a monthly payment from the equity in your home.

You repay the money when you sell your home, refinance, permanently move out, or pass away.  At that time, you or your heirs must repay the loan plus interest in one payment.

How do I get a reverse mortgage?

Reverse mortgages are available through most major banks and lenders.

Here’s what happens when you contact the lender:

  • An appraiser will determine the value of your home.
  • The lender will tell you how much you qualify for based on your age, the equity in your home, and the cost of the loan.
  • You decide how you want to receive the money.  You can receive the money:
    • As a lump sum
    • In monthly payments
    • As a credit line that lets you decide how much of the loan to use, and when to use it  
  • You sign a contract. The contract will outline the payments you will receive and the amount you have to repay including interest.

Maintaining your Reverse Mortgage

To keep your reverse mortagage in good standing you must:

  • Pay your property taxes on time
  • Maintain and repair your home
  • Have homeowner’s insurance

Your lender can end the reverse mortgage and require immediate repayment if you:

  • File for bankruptcy
  • Rent out part of your home
  • Add a new owner to title
  • Take a new loan against your property

Things to Consider

Reverse mortgages are more costly than typical home loans or home equity credit lines. They also have higher interest rates and fees. Interest is charged on the outstanding balance and is added to the amount you owe each month. This means that your total debt increases each month. 

Keep in mind that you are borrowing equity from your home. This means fewer assets for you and your heirs.

Shopping for a Reverse Mortgage

Shop around and get offers from several lenders. You should compare the terms, and look for a loan with the lowest interest rate, points and fees. 

You can be sure the lender is licensed and in good standing by calling the Department of Corporations at (800) 347-6995 or the Department of Real Estate at (213) 620-2072.

Contact us for more information or speak with one of our counselors at (800) 973-3370.  If you live outside of Southern California, call us at (213) 974-1450.

 

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For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within LA County)
web site: dca.lacounty.gov

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