Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly homeowners in California achieve additional financial security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior home owners age 62 and older to transform the equity inside their home to a monthly stream of additional cashflow and/or a credit line to be paid back when they no longer occupy the home.
The home loan, typically referred to as HECM, is funded by a lender for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the homeowner in making a well informed decision of whether this program satisfies their needs, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Counsman, Riego, Pleasant Grove, Elverta, Catlett
HECM counselors will discuss program qualification requirements, financial consequences and alternatives to receiving a HECM and specifications for the house loan becoming due and payable. After the conclusion of HECM counseling, the homeowner will be able to make an independent, informed decision of whether or not this product will fulfill their needs.
California home-owners who meet the eligibility criteria can complete a reverse mortgage application by speaking to a FHA-approved lending institution such as a bank, loan company, or savings and loan association.
Borrower Specifications For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and have substantial equity
Live in your property as a principal residence
Taking part in a consumer information session given by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the borrower
No repayment providing the house is the principal residence.
Mortgage Fees may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condo properties
Manufactured houses on land
Meet FHA property specifications and flood requirements
How the FHA reverse mortgage in California} Program Works For California Homeowners
Home-owners 62 and older that have paid off their mortgage loans or have only small mortgage amounts remaining, and are also presently living in the home are eligible to participate in HUD’s reverse mortgage loan.
The loan makes it possible for home-owners to borrow on the equity in their homes. 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 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 situations change can restructure their payment selections for a nominal fee of $20. Fees could differ based upon Loan provider.
Contrary to standard home equity loans, a HUD reverse mortgage doesn’t require repayment provided that the home is the borrower’s primary residence. Lenders regain their principal, plus interest, whenever the home is sold. The remaining value of the home goes to the homeowner or to her or his survivors. You’re never going to owe above your home’s appraised value.
If the sales proceeds are not enough to repay the amount due, HUD pays the lending company 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 wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner could borrow depends upon their age, the current interest rate, other loan costs and the appraisal vlaue of their home or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your property is, the older that you are, the lower the interest rate, the more you’re able to borrow.
There are no asset or cash flow limits on homeowners obtaining HUD’s reverse loan.
In addition there are no restrictions on the value of homes getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the amount that could 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 home-owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that could be borrowed as well as a .5% annual premium.