Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are serving to older home owners in California obtain better economical security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior home-owners age Sixty two and older to transform the home equity inside their property to a monthly flow of additional cash flow and/or a credit line to be paid back after they do not inhabit the property.
The home loan, commonly known as HECM, is funded by a lending institution for example a mortgage lender, traditional bank, credit union or savings and loan association. To support the home owner in making a knowledgeable determination of if this program suits their requirements, they’re required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Swanston, North Sacramento, Gardenland, Sacramento, Oak Park
HECM counselors will talk about program qualification requirements, financial consequences and alternatives to receiving a HECM and specifications for the house loan becoming due and payable. Upon the conclusion of HECM counseling, the home owner will be able to make an independent, educated determination of whether or not this product will fulfill their requirements.
California home-owners who fulfill the eligibility criteria 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 In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and also have significant home equity
Live in your house as a principal residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements are required of the homeowner
No repayment provided that the house is the principal residence.
Mortgage Fees may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit lived in by the borrower
HUD-approved condominiums
Manufactured homes on land
Meet FHA property conditions and flood requirements
How a reverse mortgage loans} Program Works For California Homeowners
Home-owners 62 and older who have paid off their house 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 loan.
The loan allows home owners to borrow against the equity in their properties. 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 credit line with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment options for a nominal fee of $20. Fees may vary based upon Loan company.
In contrast to ordinary home equity loans, a HUD reverse mortgage does not require repayment so long as the property is the borrower’s principal residence. Mortgage lenders recover their principal, plus interest, whenever the property is sold. The remaining value of the property would go to the homeowner or to her or his heirs. You can never owe more than your property’s appraised value.
If the sales funds are inadequate to pay the total amount payable, HUD pays the lending company the sum 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 beauty of the HUD™ FHA guarantee.
The amount a homeowner can borrow is dependent on what their age is, the current interest rate, other loan charges and the appraised value of their property or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your house is, the older you are, the lower the interest rate, the more you could borrow.
There are no asset or income restrictions on borrowers obtaining HUD’s reverse mortgage.
Additionally, there are no limitations on the value of properties being qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nevertheless, the amount that may 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 which is 2% of the maximum claim amount which can be borrowed plus a .5% annual premium.