Reverse mortgages (known as Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly home owners in California gain better economical stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior homeowners age Sixty two and older to transform the equity inside their property to a monthly stream of extra cash flow and/or a line of credit to be paid back after they cease to inhabit the property.
The mortgage, typically referred to as HECM, is funded from a mortgage company for example a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making an educated decision of whether this program suits their needs, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Greendale, Coniston, Willow Point, Clarksburg, Hood
HECM counselors will discuss program qualification requirements, financial consequences and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the homeowner should be able to make an independent, well informed decision of whether or not this product will fulfill their needs.
California homeowners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association.
Borrower Requirements When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have substantial equity
Live in your house as a principal residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the applicant
No repayment provided the property is the principal residence.
Closing costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condominiums
Manufactured houses on property
Meet FHA property requirements and flood requirements
How a reverse mortgage} Program Works For California Homeowners
Home-owners 62 and older which have paid off their house loans or have only small mortgage balances outstanding, and are currently living in the property are eligible to participate in HUD’s reverse mortgage program.
The loan makes it possible for homeowners to borrow on the equity in their properties. Homeowners can select from five payment plans:
Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term – equal monthly paymentsfor 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 line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose conditions change can restructure their payment options for a nominal fee of $20. Fees can vary depending on Lender.
Contrary to ordinary home equity loans, a HUD reverse mortgage does not require repayment so long as the property is the borrower’s primary residence. Lenders regain their principal, plus interest, when the property is sold. The remainder of the value of the property would go to the homeowner or to his or her survivors. You can never owe greater than your property’s appraised value.
If the sales proceeds are inadequate to cover the balance owed, HUD pays the lending company the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the beauty of the HUD™ FHA guarantee.
The total a homeowner may borrow depends on what their age is, the current interest rates, other loan charges and the appraisal of their property or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your home is, the older you are, the lower the rate, the more you’ll be able to borrow.
There aren’t any asset or income limits on borrowers obtaining HUD’s reverse loan.
There are also no limitations on the value of properties getting qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nevertheless, the amount that may be borrowed is derived from the lower of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the homeowners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount which can be borrowed and then a .5% annual premium.