Reverse mortgages (known as Home Equity Conversion Mortgages, abbreviated to HECM) are aiding older home owners in California achieve improved monetary stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age 62 and older to convert the home equity in their property to a monthly stream of additional cashflow and/or a line of credit to be repaid after they cease to occupy the property.
The loan, often called 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 determination of if this program satisfies their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Rosemont, La Riviera, Mayhew, Arden Town, Perkins
HECM counselors will talk about program qualification conditions, financial consequences and alternatives to receiving a HECM and specifications for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the home owner must be able to make an independent, informed determination of whether or not this product will meet their requirements.
California home-owners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Requirements To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home as well as have considerable home equity
Occupy your house as a primary residence
Participation in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications are required of the borrower
No repayment so long as the property is the primary residence.
Fee may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condo properties
Manufactured houses on property
Meet FHA property specifications and flood requirements
How a reverse mortgage in California} Program Works For California Homeowners
Home-owners 62 and older which have paid back their mortgage loans or have only small home loan amounts remaining, and are presently living in the property meet the criteria to participate in HUD’s reverse mortgage program.
The loan makes it possible for home-owners to borrow against the equity in their homes. 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 line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly payments 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 dependant upon Loan company.
As opposed to normal home equity loans, a HUD reverse mortgage does not need repayment provided the property is the borrower’s primary residence. Financial institutions recover their principal, plus interest, when the property is sold. The remainder of the value of the property would go to the homeowner or to his / her survivors. You’re never going to owe above your property’s appraised value.
If the sales funds are insufficient to cover the amount payable, HUD will pay the lending company the amount 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 great thing about the HUD™ FHA guarantee.
The amount a homeowner could borrow is dependent upon their age, the current interest rate, other loan fees and the appraisal vlaue of their property or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your house is, the older you are, the lower the interest, the more you can borrow.
There are no asset or income limits on borrowers acquiring HUD’s reverse house loan.
There’s also no limitations on the value of homes qualifying for a HUD reverse mortgage. The value of the house will be determined by an appraisal. However, the total that could 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 home-owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount that could be borrowed and then a .5 percent annual premium.