Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly home owners in California obtain greater monetary stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior homeowners age 62 and older to transform the equity in their home to a monthly stream of additional cashflow and/or a credit line to be paid back once they do not live in the home.
The mortgage loan, also known as HECM, is funded from a lending institution for example a mortgage lender, traditional bank, credit union or savings and loan association. To support the home-owner in making an educated determination of if this program meets their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Davis Mobile Estates, Davis, Royal Oak Manufactured Home Community, Yolano, Rancho Yolo Mobile Home Park
HECM counselors will talk about program qualification conditions, financial consequences and alternatives to getting a HECM and specifications for the home loan becoming due and payable. After the completion of HECM counseling, the home-owner must be able to make an independent, informed determination of whether the product will fulfill their needs.
California homeowners who satisfy the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Specifications For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have significant equity
Reside in your property as a principal residence
Participation in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements are required of the homeowner
No repayment as long as the property 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 condos
Manufactured houses on property
Meet FHA property requirements and flood requirements
How the reverse mortgage company in California} Program Works For California Homeowners
Property owners 62 and older which have repaid their home loans or have only small loan balances remaining, and are also presently living in the home meet the criteria to participate in HUD’s reverse mortgage loan.
The loan allows homeowners to borrow on the equity in their houses. 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 situations change can restructure their payment selections for a nominal fee of $20. Fees may vary dependant upon Loan company.
In contrast to standard home equity loans, a HUD reverse mortgage doesn’t require repayment provided that the home is the borrower’s primary residence. Mortgage lenders regain their principal, plus interest, when the home is sold. The rest of the value of the home would go to the homeowner or to his / her survivors. You can’t ever owe more than your home’s appraisal value.
If the sales funds are inadequate to pay the total amount owed, HUD pays off the lending company the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. This is the beauty of the HUD™ FHA guarantee.
The total a homeowner could borrow is dependent on their age, current interest rates, other loan fees and the appraisal of their home or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your home is, the older that you are, the lower the interest, the more you are able to borrow.
There are no asset or income restrictions on borrowers obtaining HUD’s reverse home loan.
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. Nonetheless, 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 homeowners who obtain 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.