Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are aiding elderly residents in California achieve an increased personal financial security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home-owners age 62 and older to transform the home equity in their home to a monthly flow of additional cash flow and/or a credit line to be paid back once they do not inhabit the home.
The mortgage loan, typically referred to as HECM, is funded from a loan company such as a mortgage lender, traditional bank, credit union or savings and loan association. To support the homeowner in making a knowledgeable decision of if the program satisfies their needs, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Mather Field, Soudan, Citrus, Carmichael, Mayhew
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to getting a HECM and specifications for the mortgage becoming due and payable. Upon the completion of HECM counseling, the homeowner must be able to make an independent, informed decision of whether the product will satisfy their needs.
California home-owners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Standards For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and also have substantial home equity
Occupy your property as a principal residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the applicant
No repayment provided the home is the principal residence.
Closing costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condominiums
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How a local reverse mortgage in California} Program Works For California Homeowners
Property owners 62 and older who have paid back their mortgage loans or have only small loan amounts remaining, and are also presently residing in the home are eligible to take part in HUD’s reverse mortgage program.
The loan allows home owners to borrow from the equity in their houses. 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 circumstances change can restructure their payment selections for a nominal fee of $20. Fees may vary depending on Lender.
Unlike standard home equity loans, a HUD reverse mortgage does not require repayment provided the home is the borrower’s primary residence. Mortgage companies regain their principal, plus interest, when the home is sold. The rest of the value of the home would go to the homeowner or to her or his heirs. You can’t ever owe greater than your home’s appraised value.
If the sales proceeds are insufficient to cover the total amount due, HUD pays the financial institution the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The total amount a homeowner may borrow depends on their age, the current interest rate, other loan fees and the appraisal of their home or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your property is, the older you are, the lower the interest, the more you could borrow.
There isn’t any asset or cash flow restrictions on homeowners receiving 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 property is determined by an appraisal. Nonetheless, the total amount that could 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 receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that could be borrowed as well as a .5% annual premium.