Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are serving to older homeowners in California attain improved monetary stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior home-owners age 62 and older to transform the home equity inside their house to a monthly flow of extra cash flow and/or a credit line to be paid back when they no longer occupy the house.
The loan, often called HECM, is funded from a mortgage company for example a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making a well informed determination of whether this program satisfies their needs, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Vin, Kiesel, Fremont Yolo, Lovdal, Bryte
HECM counselors will discuss program qualification requirements, financial implications and alternatives to obtaining a HECM and specifications for the mortgage becoming due and payable. Upon the completion of HECM counseling, the home owner will be able to make an independent, educated determination of whether or not this product will satisfy their needs.
California home-owners who meet the eligibility criteria can complete a reverse mortgage application by speaking to a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Criteria In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property and also have substantial home equity
Reside in your home as a principal residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications are required of the applicant
No repayment as long as the home is the principal 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 homeowner
HUD-approved condominiums
Manufactured houses on land
Meet FHA property requirements and flood requirements
How a reverse mortgage lender} Program Works For California Homeowners
Homeowners 62 and older that have paid in full their mortgage loans or have only small mortgage balances remaining, and are also presently living in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan allows homeowners to borrow against 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 circumstances change can restructure their payment selections for a nominal fee of $20. Fees can vary dependant upon Financial institution.
In contrast to normal home equity loans, a HUD reverse mortgage does not need repayment as long as the house is the borrower’s principal residence. Loan companies regain their principal, plus interest, once the house is sold. The rest of the value of the house would go to the homeowner or to their survivors. You’re never going to owe more than your house’s appraised value.
If the sales funds are not sufficient to repay the total payable, HUD will pay the mortgage lender the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow is dependent upon what their age is, the current interest rate, other loan fees and the appraised value of their house or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your house is, the older you are, the lower the rate, the more you can borrow.
There are no asset or income restrictions on borrowers receiving HUD’s reverse mortgage.
There are no limitations on the value of properties getting qualified 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 lesser of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the homeowners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount which may be borrowed and then a .5% annual premium.