Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are serving to older residents in California attain better personal financial security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior home-owners age Sixty two and older to transform the home equity in their property into a monthly flow of additional cashflow and/or a line of credit to be paid back once they cease to inhabit the property.
The loan, often called HECM, is funded by a loan company such as a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making an informed decision of if this program meets their requirements, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Saxon, Green, Lund, Sucro, Greendale
HECM counselors will discuss program eligibility requirements, financial consequences and alternatives to obtaining a HECM and specifications for the house loan becoming due and payable. Upon the conclusion of HECM counseling, the homeowner must be able to make an independent, educated decision 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 contact with a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Criteria To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and also have considerable home equity
Reside in your house as a primary residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the borrower
No repayment providing the home is the primary residence.
Costs 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 houses on land
Meet FHA property specifications and flood requirements
How a FHA reverse mortgage in California} Program Works For California Homeowners
Home-owners 62 and older which have paid back their home loans or have only small loan amounts outstanding, and are also presently living in the property are eligible to take part in HUD’s reverse mortgage loan.
The loan allows homeowners to borrow on the equity in their houses. 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 options for a nominal fee of $20. Fees can vary dependent on Loan company.
As opposed to normal home equity loans, a HUD reverse mortgage does not require repayment providing the property is the borrower’s principal residence. Loan companies regain their principal, plus interest, when the property is sold. The rest of the value of the property would go to the homeowner or to her or his heirs. You can never owe in excess of your property’s appraised value.
If the sales funds are not sufficient to cover the total amount owed, HUD will pay the lender the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow depends upon their age, the current interest rates, other loan fees and the appraisal vlaue 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 can borrow.
There aren’t any asset or cash flow limits on homeowners receiving HUD’s reverse house loan.
Additionally, there are no limitations on the value of houses being qualified 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 that is 2 percent of the maximum claim amount that could be borrowed and then a .5% annual premium.