Reverse mortgages (generally known as Home Equity Conversion Mortgages, abbreviated to HECM) are aiding elderly home owners in California reach better monetary security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior homeowners age Sixty two and older to convert the home equity inside their property to a monthly flow of extra cash flow and/or a credit line to be repaid after they no longer live in the property.
The mortgage, also known as HECM, is funded from a loan company such as a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making a knowledgeable determination of if this program satisfies their requirements, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Folsom Junction, Natoma, Orangevale, Prairie City, Alder Creek
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to receiving a HECM and specifications for the home loan becoming due and payable. After the completion of HECM counseling, the homeowner will be able to make an independent, well informed determination of whether the product will meet their requirements.
California homeowners who meet the eligibility criteria can complete a reverse mortgage application by getting in touch 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 old or older
Own your own home as well as have considerable home equity
Live in your property as a primary residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the borrower
No repayment so long as the home is the primary residence.
Loan Costs 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 condo properties
Manufactured houses on property
Meet FHA property conditions and flood requirements
How the reverse home loan} Program Works For California Homeowners
Home owners 62 and older that have repaid their home loans or have only small loan amounts remaining, and are presently living in the property meet the criteria to take part in HUD’s reverse mortgage loan.
The loan permits home owners to borrow against the equity in their properties. 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 circumstances change can restructure their payment options for a nominal fee of $20. Fees could differ dependent on Financial institution.
Contrary to standard home equity loans, a HUD reverse mortgage does not require repayment as long as the property is the borrower’s primary residence. Mortgage lenders regain their principal, plus interest, when the property is sold. The rest of the value of the property would go to the homeowner or to her or his survivors. You’re never going to owe above your property’s appraisal value.
If the sales funds are insufficient to repay the amount payable, HUD will pay the financial institution the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner could borrow is determined by how old they are, current interest rates, other loan fees and the appraised value of their property or FHA ‘s mortgage limits with their area, whichever is less. Normally, the more valuable your home is, the older that you are, the lower the rate, the more you could borrow.
There isn’t any asset or cash flow limitations on borrowers acquiring HUD’s reverse mortgage.
In addition there are no restrictions on the value of properties getting qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the total amount which can be borrowed comes from the lesser 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 which is 2% of the maximum claim amount that may be borrowed and then a .5% annual premium.