Traditional vs Reverse Mortgages – Visual Guide & Comparison For Culver City
For Refinance & Purchase in Culver City
Discover How a HECM Reverse Mortgage Can Easily Provide You With a Non-Taxable Cash Flow Without Depleting Your Savings or Managed Funds
Traditional vs Reverse Mortgages – Visual Guide & Comparison
1) Visual “At‑a‑Glance”
Purpose
- Traditional (Forward) Mortgage: Buy or refinance a home and build equity by making monthly payments.
- Reverse Mortgage (HECM/proprietary): Convert home equity into cash/LOC/monthly payouts without mandatory monthly principal & interest payments; balance grows over time.
Who it’s for
- Traditional: Any qualified borrower (income/credit/DTI focused), any occupancy type depending on program.
- Reverse: Typically age 62+ (HECM), owner‑occupied principal residence, sufficient equity.
Cash Flow
- Traditional: You pay monthly P&I + taxes/insurance/HOA.
- Reverse: You receive cash/LOC/tenure/term draws; you must still pay taxes/insurance/HOA and maintain the home; no required monthly P&I.
When it’s Due
- Traditional: Amortizes with scheduled monthly payments until paid off or refinanced/sold.
- Reverse: Becomes due/repayable upon a maturity event (e.g., borrower no longer occupies home as principal residence, sells, passes away, or fails obligations like taxes/insurance). Heirs typically sell/refinance—non‑recourse for HECM (you/estate won’t owe more than the home’s value at sale).
Interest Behavior
- Traditional: Balance decreases over time with payments.
- Reverse: Balance increases over time as interest and financed fees accrue on amounts drawn.
Rate Types
- Traditional: Fixed or adjustable (ARM).
- Reverse: Fixed (usually lump‑sum single draw) or adjustable (often enables line of credit/ongoing draws; HECM LOC features growth on the available credit line).
2) Side‑by‑Side: Fees & Terms
| Category | Traditional (Forward) Mortgage | Reverse Mortgage (HECM‑focused) |
| Eligibility | Income, employment, credit score, DTI, assets, property meets guidelines | Age 62+ (HECM), principal residence, HUD counseling, sufficient equity, financial assessment |
| Occupancy | Primary/second home/investment | Primary residence only (occupancy certification required) |
| Loan Limit | Conforming/jumbo limits set by FHFA/market | HECM “maximum claim amount” limited to FHA’s annual lending limit; proprietary may exceed |
| Origination Fee | 0–1% of loan amount; may be waived | HECM: greater of $2,500 or 2% of first tranche + 1% above (cap $6,000); proprietary varies |
| Mortgage Insurance | PMI (if <20% down) or FHA MIP | HECM: upfront + annual MIP |
| Closing Costs | Appraisal, title, escrow, credit, etc. | Similar third‑party costs |
| Interest | Fixed or ARM; paid monthly | Fixed or ARM; accrues and compounds on draws |
| Monthly Payment | Required | Not required (taxes/insurance/HOA still due) |
| Disbursement | Lump sum | Lump sum, LOC (growth), term/tenure monthly payouts |
| Non‑Recourse | Varies | HECM non‑recourse |
4) Quick Decision Guide
| Goal | Traditional | Reverse |
| Buy a home | ✔️ | HECM for Purchase only |
| Eliminate payments | Possible (refi) | ✔️ |
| Create cash/LOC | HELOC (requires payment) | ✔️ LOC with growth |
| Boost retirement cash flow | Limited | ✔️ |
| Second home/investment | ✔️ | ❌ |
5) Key Risks & Responsibilities
- Taxes/Insurance/HOA must be paid on time.
- Reverse balance grows over time—review amortization projections.
- Heirs/Estate: non‑recourse protections apply.
- HUD updates: program limits and PLF factors change periodically.
California‑Specific Notes
- Must occupy as principal residence; annual occupancy certification required.
- Keep property taxes & insurance current (LESA may apply).
- CA emphasizes senior protections—verify counseling certificate and written estimates.
- Trust ownership common—provide living trust docs for review.
- Expect CA‑specific disclosures (NHD, HOA).
Tip: Bring tax bill, insurance page, and HOA docs to your first meeting.
6) Disclosures & Compliance Notes
- Educational only, not a loan offer.
- HECMs require HUD‑approved counseling.
- Proprietary reverse loans differ; not FHA‑insured.
- Equal Housing Lender.
- NMLS #992923 · CA BRE #00582319
- Website: reversemortgageserviceslosangeles.com
- Phone: (424) 225‑2167
How to Get Started
How to Get Started
Getting started is simple. Schedule a no-obligation consultation to find out how much equity you can access. You’ll receive a personalized illustration and clear explanation of available options.
📞 Call (424) 225-2167 or click below to request your free estimate.
[Contact Form Button / Calculator Link]
🔍 Page Summary: Traditional vs Reverse Mortgages – Visual Guide & Comparison Culver City
This page gives a clear, side-by-side look at traditional (forward) vs. reverse mortgages so homeowners can choose the right fit. At a glance, it compares purpose, who qualifies, cash-flow impact, repayment triggers, interest behavior, and rate types, then expands into fees & terms (origination, MIP/PMI, loan limits, occupancy rules) and disbursement options (lump sum, line of credit with growth, term/tenure payments). A quick decision grid highlights when each loan shines – buying or refinancing, eliminating monthly payments, creating a cash buffer, or funding retirement – while noting that reverse mortgages are for age-eligible, owner-occupied primary residences and remain non-recourse. The guide also flags California-specific responsibilities (occupancy certification, taxes/insurance, possible LESA, common trust ownership documentation) and closes with practical next steps: schedule a consult, use the calculator, or request a custom quote for Culver City and nearby neighborhoods.
Other areas near Culver City we cover include: