Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly people in California achieve better personal financial security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to transform the equity inside their house into a monthly flow of additional cashflow and/or a credit line to be paid back when they cease to occupy the house.
The loan, typically referred to as HECM, is funded by a mortgage company for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the home owner in making a well informed decision of if this program meets their requirements, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Cunard, Marchant, Karnak, Knights Landing, Verona
HECM counselors will discuss program qualification requirements, financial consequences and alternatives to obtaining a HECM and specifications for the mortgage becoming due and payable. After the conclusion of HECM counseling, the home owner should be able to make an independent, informed decision of whether this product will fulfill their requirements.
California home-owners who fulfill the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lending institution such as a bank, loan company, or savings and loan association.
Borrower Specifications To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and also have considerable equity
Occupy your house as a primary residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements will be required of the borrower
No repayment so long as the house is the primary residence.
Loan Costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condo properties
Manufactured homes on land
Meet FHA property standards and flood requirements
How the FHA reverse mortgage} Program Works For California Homeowners
Home owners 62 and older which have paid in full their mortgage loans or have only small home loan balances outstanding, and are presently residing in the house meet the criteria to participate in HUD’s reverse mortgage program.
The loan allows homeowners to borrow from 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 conditions change can restructure their payment options for a nominal fee of $20. Fees may vary dependant upon Loan provider.
As opposed to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment provided the house is the borrower’s primary residence. Lenders regain their principal, plus interest, once the house is sold. The remainder of the value of the house goes to the homeowner or to his or her heirs. You can never owe above your house’s appraisal value.
If the sales funds are insufficient to cover the total amount due, HUD will pay the mortgage lender the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to supply this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner could borrow is dependent on what their age is, the current interest rates, other loan costs and the appraisal of their house or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your home is, the older that you are, the lower the rate, the more you’ll be able to borrow.
There are no asset or income limits on borrowers receiving HUD’s reverse mortgage.
There’s also no limits on the value of properties qualifying for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the amount which can 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 homeowners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount which can be borrowed as well as a .5% annual premium.