Reverse mortgages (often called Home Equity Conversion Mortgages, shortened to HECM) are aiding older people in California gain an increased financial stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior home-owners age 62 and older to convert the home equity in their property to a monthly stream of extra cashflow and/or a credit line to be paid back once they do not occupy the property.
The home loan, often called HECM, is funded from a mortgage company for example a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a knowledgeable decision of whether the program suits their needs, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Woodland, Woodlands Mobile Home Park, Leisureville Mobile Home Park, Royal Palms Mobile Estates, Idle Wheel Mobile Estates
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to receiving a HECM and provisions for the house loan becoming due and payable. Upon the conclusion of HECM counseling, the home owner must be able to make an independent, educated decision of whether this product will meet their needs.
California home owners who fulfill the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lender such as a bank, loan 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 home as well as have sizeable home equity
Occupy your house as a primary residence
Participation in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the applicant
No repayment provided that the property is the primary residence.
Closing costs 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 condominiums
Manufactured homes on property
Meet FHA property standards and flood requirements
How the reverse mortgage specialist in California} Program Works For California Homeowners
Homeowners 62 and older which have paid off their home loans or have only small home loan balances outstanding, and are currently living in the property meet the requirements to participate in HUD’s reverse mortgage loan.
The loan allows home owners to borrow from the equity in their properties. 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 credit line with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly installments 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 could differ based upon Financial institution.
As opposed to regular home equity loans, a HUD reverse mortgage does not need repayment provided the property is the borrower’s primary residence. Loan companies regain their principal, plus interest, once the property is sold. The remainder of the value of the property would go to the homeowner or to her or his heirs. You can’t ever owe greater than your property’s appraisal value.
If the sales proceeds are inadequate to repay the total amount due, HUD will pay the financial institution the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner could borrow will depend on their age, current interest rates, other loan fees and the appraisal 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 rate, the more you could borrow.
There isn’t any asset or income restrictions on homeowners acquiring HUD’s reverse mortgage.
There are also no restrictions on the value of properties being qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the total amount that could 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that may be borrowed along with a .5 percent annual premium.