Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are assisting older residents in California achieve improved economical security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home owners age 62 and older to convert the equity in their house to a monthly stream of extra cash flow and/or a credit line to be paid back after they cease to live in the house.
The mortgage loan, also known as HECM, is funded by a loan company like a mortgage lender, bank, credit union or savings and loan association. To support the home owner in making an educated decision of if the program satisfies their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Coniston, Clarksburg, Central, Freeport, Arcade
HECM counselors will discuss program qualification requirements, financial implications and alternatives to getting a HECM and specifications for the mortgage becoming due and payable. After the completion of HECM counseling, the home owner should be able to make an independent, educated decision of whether the product will satisfy their needs.
California homeowners who meet 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 Specifications In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and have significant equity
Live in your property as a principal residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the borrower
No repayment provided that the home is the principal residence.
Mortgage Fees may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condominiums
Manufactured houses on property
Meet FHA property specifications and flood requirements
How the reverse mortgages} Program Works For California Homeowners
Property owners 62 and older who have paid back their mortgage loans or have only small mortgage amounts remaining, and are currently residing in the house are eligible to take part in HUD’s reverse mortgage loan.
The loan enables home owners to borrow on the equity in their homes. Homeowners can choose 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees can vary based upon Lender.
As opposed to standard home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the house is the borrower’s primary residence. Loan companies recover their principal, plus interest, whenever the house is sold. The remainder of the value of the house goes to the homeowner or to her or his survivors. You can’t ever owe in excess of your house’s appraisal value.
If the sales funds are inadequate to repay the amount payable, HUD pays off the lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount of money a homeowner could borrow depends on what their age is, the current interest rates, other loan fees and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Generally, the more valuable your house is, the older you are, the lower the interest rate, the more you are able to borrow.
There are no asset or income restrictions on borrowers receiving HUD’s reverse loan.
There are also no limitations on the value of homes qualifying for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, the total which can 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that may be borrowed along with a .5 percent annual premium.