Reverse mortgages (often called Home Equity Conversion Mortgages, shortened to HECM) are serving to elderly residents in California attain improved financial stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior home-owners age 62 and older to transform the equity in their property to a monthly stream of additional cashflow and/or a credit line to be repaid after they no longer occupy the property.
The mortgage, often called HECM, is funded from a mortgage company for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the homeowner in making an informed determination of if this program suits their requirements, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Laguna West-Lakeside, Laguna, Clarksburg, Freeport, Franklin
HECM counselors will discuss program qualification conditions, financial implications and alternatives to receiving a HECM and specifications for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the homeowner must be able to make an independent, educated determination of whether or not the product will meet their requirements.
California home owners who fulfill the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lender such as a bank, loan company, or savings and loan association.
Borrower Standards When Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property and also have sizeable equity
Live in your home as a primary residence
Taking part in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements are required of the borrower
No repayment so long as the home is the primary residence.
Fee may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condos
Manufactured houses on land
Meet FHA property standards and flood requirements
How a reverse mortgage company} Program Works For California Homeowners
Home-owners 62 and older who have paid in full their mortgage loans or have only small loan balances remaining, and are currently living in the property meet the requirements to take part in HUD’s reverse mortgage program.
The loan makes it possible for home-owners to borrow against 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 credit line with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly payments 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 based upon Financial institution.
In contrast to standard home equity loans, a HUD reverse mortgage doesn’t require repayment providing the property is the borrower’s primary residence. Loan providers regain their principal, plus interest, whenever the property is sold. The remainder of the value of the property would go to the homeowner or to her or his survivors. You’re never going to owe more than your property’s appraisal value.
If the sales proceeds are insufficient to cover the total amount owed, HUD pays the financial institution the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount of money a homeowner can borrow depends upon how old they are, current interest rates, other loan fees and the appraisal of their property or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your house is, the older you are, the lower the interest rate, the more you’re able to borrow.
There isn’t any asset or income restrictions on homeowners obtaining HUD’s reverse home loan.
There are no limits on the value of properties qualifying for a HUD reverse mortgage. The value of the house will be determined by an appraisal. However, the total 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 home-owners who get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that may be borrowed as well as a .5% annual premium.