Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are serving to older homeowners in California obtain additional economical security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior home-owners age Sixty two and older to transform the equity in their house into a monthly flow of extra cashflow and/or a line of credit to be paid back when they no longer inhabit the house.
The home loan, also known as HECM, is funded by a loan company for example a mortgage lender, traditional bank, credit union or savings and loan association. To support the home-owner in making an informed decision of if the program fulfills their requirements, they’re required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Nimbus, Natoma, Gold River, Prairie City, Folsom Junction
HECM counselors will discuss program eligibility conditions, financial consequences and alternatives to obtaining a HECM and specifications for the home loan becoming due and payable. After the conclusion of HECM counseling, the home-owner should be able to make an independent, well informed decision of whether the product will meet their requirements.
California home-owners who satisfy the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender such as a bank, loan company, or savings and loan association.
Borrower Requirements In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property as well as have sizeable equity
Live in your home as a principal residence
Taking part in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the homeowner
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 borrower
HUD-approved condo properties
Manufactured houses on property
Meet FHA property guidelines and flood requirements
How a reverse mortgage lenders} Program Works For California Homeowners
Home-owners 62 and older that have paid in full their home loans or have only small home loan balances outstanding, and are also presently living in the house meet the requirements to take part in HUD’s reverse mortgage program.
The loan allows homeowners to borrow from the equity in their homes. Homeowners can choose 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 line of credit with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly installments 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.
Contrary to normal home equity loans, a HUD reverse mortgage doesn’t require repayment provided the house is the borrower’s principal residence. Mortgage companies recover their principal, plus interest, once the house is sold. The rest of the value of the house goes to the homeowner or to her or his heirs. You can never owe in excess of your house’s appraised value.
If the sales proceeds are not enough to pay the balance owed, HUD pays off the mortgage lender 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 a homeowner could borrow will depend on how old they are, current interest rate, other loan fees 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 interest, the more you’re able to borrow.
There are no asset or income limitations on homeowners receiving HUD’s reverse loan.
There are also no limitations on the value of homes qualifying for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the total that may be borrowed is derived 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 obtain 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 percent annual premium.