Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are assisting older homeowners in California achieve greater financial security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior home owners age Sixty two and older to convert the home equity inside their home into a monthly stream of additional cashflow and/or a line of credit to be paid back once they cease to occupy the home.
The mortgage loan, often called HECM, is funded by a loan company such as a mortgage lender, traditional bank, credit union or savings and loan association. To assist the homeowner in making an informed determination of whether this program fulfills their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Soudan, Gold River, Rancho Cordova, Fair Oaks, Nimbus
HECM counselors will discuss program qualification requirements, financial consequences and alternatives to receiving a HECM and specifications for the home loan becoming due and payable. Upon the completion of HECM counseling, the homeowner will be able to make an independent, educated determination of whether or not the product will satisfy their needs.
California home-owners who fulfill the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Criteria For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and also have substantial home equity
Occupy your home as a principal residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the homeowner
No repayment providing the property is the principal residence.
Mortgage Fees may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condominiums
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How the Home Equity Conversion Mortgage} Program Works For California Homeowners
Homeowners 62 and older who have paid off their mortgage loans or have only small mortgage balances remaining, and are presently living in the home meet the requirements to take part in HUD’s reverse mortgage loan.
The loan allows home-owners to borrow on the equity in their homes. Homeowners can choose 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 options for a nominal fee of $20. Fees can vary dependent on Loan company.
In contrast to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment so long as the home is the borrower’s primary residence. Mortgage companies regain their principal, plus interest, whenever the home is sold. The remainder of the value of the home would go to the homeowner or to her or his survivors. You can never owe more than your home’s appraisal value.
If the sales funds are not sufficient to pay the balance owed, HUD pays the lending company the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner may borrow depends upon how old they are, current interest rates, other loan charges and the appraisal vlaue of their home or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your house is, the older you are, the lower the interest, the more you can borrow.
There aren’t any asset or cash flow restrictions on borrowers acquiring HUD’s reverse home loan.
There are no limits on the value of homes being qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nevertheless, the total amount 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 home-owners who get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount which can be borrowed plus a .5% annual premium.