Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly home owners in California achieve improved monetary security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior homeowners age Sixty two and older to transform the home equity in their home to a monthly stream of additional cash flow and/or a credit line to be repaid after they do not live in the home.
The mortgage loan, typically referred to as HECM, is funded by a lending institution like a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a well informed decision of whether the program meets their requirements, they’re required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Ben Ali, Del Paso Heights, Swanston, Town and Country Village, North Sacramento
HECM counselors will talk about program qualification requirements, financial implications and alternatives to obtaining a HECM and specifications for the home loan becoming due and payable. Upon the conclusion of HECM counseling, the home owner will be able to make an independent, educated decision of whether the product will fulfill their requirements.
California home-owners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Criteria For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home and have significant home equity
Live in your house 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 mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements are required of the homeowner
No repayment as long as the home is the primary residence.
Costs may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit occupied by the homeowner
HUD-approved condo properties
Manufactured homes on property
Meet FHA property standards and flood requirements
How the local reverse mortgage lenders} Program Works For California Homeowners
Home owners 62 and older which have paid off their mortgage loans or have only small mortgage balances outstanding, and are also currently living in the home meet the requirements to take part in HUD’s reverse mortgage loan.
The loan enables home owners to borrow from the equity in their properties. Homeowners can select 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 conditions change can restructure their payment options for a nominal fee of $20. Fees may vary dependant upon Loan provider.
As opposed to regular home equity loans, a HUD reverse mortgage does not need repayment so long as the home is the borrower’s principal residence. Mortgage companies recover their principal, plus interest, whenever the home is sold. The rest of the value of the home goes to the homeowner or to their heirs. You’re never going to owe more than your home’s appraisal value.
If the sales funds are not enough to pay the total payable, HUD will pay the lending company 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 total amount a homeowner may borrow depends upon how old they are, current interest rates, other loan fees and the appraised value of their home or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your house is, the older you are, the lower the interest rate, the more you can borrow.
There isn’t any asset or cash flow restrictions on homeowners obtaining HUD’s reverse mortgage.
There are also no limits on the value of properties qualifying for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, the total that may be borrowed comes 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% of the maximum claim amount which can be borrowed as well as a .5 percent annual premium.