Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are assisting older people in California achieve better economical security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age 62 and older to transform the home equity inside their house into a monthly stream of additional cash flow and/or a credit line to be paid back after they cease to live in the house.
The home loan, also known as HECM, is funded from a lender such as a mortgage lender, traditional bank, credit union or savings and loan association. To assist the home-owner in making an educated decision of if the program fulfills their requirements, they’re required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Manlove, La Riviera, Mayhew, Arden Town, Perkins
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to getting a HECM and provisions for the house loan becoming due and payable. After the completion of HECM counseling, the home-owner should be able to make an independent, informed decision of whether or not this product will fulfill their requirements.
California homeowners who meet the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Criteria In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and have considerable home equity
Reside in your house as a primary residence
Taking part in a consumer information session given by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest applicant
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the applicant
No repayment so long as the home is the primary residence.
Costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condos
Manufactured houses on land
Meet FHA property requirements and flood requirements
How the Home Equity Conversion Mortgage} Program Works For California Homeowners
Home owners 62 and older which have paid off their mortgages or have only small home loan amounts outstanding, and are presently living in the house meet the requirements to take part in HUD’s reverse mortgage program.
The loan permits home-owners to borrow on the equity in their houses. Homeowners can choose from five payment plans:
Tenure – equal monthly installments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term – equal monthly installmentsfor a fixed period of months selected.
Line of Credit – unscheduled payments or in installments, at times and in amount of borrower’s choosing until the line of credit is exhausted.
Modified Tenure – combination of credit line with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly installments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment selections for a nominal fee of $20. Fees could differ dependent on Financial institution.
Unlike normal home equity loans, a HUD reverse mortgage doesn’t require repayment provided that the house is the borrower’s primary residence. Financial institutions regain their principal, plus interest, when the house is sold. The remainder of the value of the house goes to the homeowner or to her or his survivors. You can never owe more than your house’s appraisal value.
If the sales proceeds are inadequate to pay the amount due, HUD will pay the lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total amount a homeowner could borrow depends upon how old they are, the current interest rates, other loan charges and the appraised value of their house or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your home is, the older you are, the lower the interest rate, the more you could borrow.
There aren’t any asset or income limits on borrowers obtaining HUD’s reverse home loan.
There’s also no limits on the value of houses being qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. Nonetheless, the total that may be borrowed comes from the lesser of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the home-owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount which may be borrowed along with a .5% annual premium.