Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are aiding elderly residents in California achieve additional personal financial stability 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 convert the home equity inside their property to a monthly flow of additional cash flow and/or a line of credit to be repaid once they cease to live in the property.
The mortgage, also known as HECM, is funded from a mortgage company like a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making a knowledgeable decision of if this program meets their needs, they’re required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: La Riviera, Rosemont, Manlove, Arden Town, Walsh Station
HECM counselors will discuss program eligibility requirements, financial implications and alternatives to obtaining a HECM and specifications for the mortgage loan becoming due and payable. After the completion of HECM counseling, the home owner must be able to make an independent, well informed decision of whether the product will satisfy their needs.
California home owners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Criteria In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and also have significant home equity
Live in your house as a primary residence
Taking part in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the borrower
No repayment provided the home is the primary residence.
Fee may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condominiums
Manufactured homes on land
Meet FHA property standards and flood requirements
How the reverse mortgage company} Program Works For California Homeowners
Home owners 62 and older that have paid off their mortgages or have only small mortgage amounts remaining, and are also currently residing in the property meet the criteria to participate in HUD’s reverse mortgage program.
The loan makes it possible for property owners to borrow against the equity in their homes. 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 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees can vary depending on Lender.
Unlike regular home equity loans, a HUD reverse mortgage does not require repayment provided that the property is the borrower’s primary residence. Loan companies recover their principal, plus interest, once the property is sold. The remaining value of the property goes to the homeowner or to his or her heirs. You can never owe more than your property’s appraisal value.
If the sales funds are not enough to pay the amount payable, HUD will pay the financial institution the amount of the deficiency. 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 can borrow depends on how old they are, current interest rates, other loan costs and the appraised value of their property or FHA ‘s mortgage limits for their area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you could borrow.
There isn’t any asset or cash flow limits on borrowers receiving HUD’s reverse house loan.
In addition there are no limits on the value of homes being qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the total which can be borrowed is derived from the lower of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the property owners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which may be borrowed plus a .5% annual premium.