Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly home owners in California reach an increased financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home-owners age Sixty two and older to convert the equity inside their home to a monthly stream of extra cashflow and/or a line of credit to be paid back once they do not live in the home.
The loan, often called HECM, is funded from a loan company such as a mortgage lender, traditional bank, credit union or savings and loan association. To support the home owner in making an educated determination of whether the program meets their needs, they are required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Sankey, Catlett, Counsman, Riego, Joes Landing
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to getting a HECM and specifications for the house loan becoming due and payable. Upon the completion of HECM counseling, the home owner will be able to make an independent, well informed determination of whether this product will fulfill 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 like a bank, loan company, or savings and loan association.
Borrower Specifications For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and have sizeable equity
Occupy your home as a principal residence
Taking part in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications are required of the applicant
No repayment so long as the home is the principal residence.
Fee 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 condo properties
Manufactured houses on property
Meet FHA property requirements and flood requirements
How a reverse mortgage specialist in California} Program Works For California Homeowners
Homeowners 62 and older who have repaid their home loans or have only small home loan balances remaining, and are presently residing in the home meet the criteria to take part in HUD’s reverse mortgage program.
The loan allows property owners to borrow from the equity in their houses. Homeowners can select 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 line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly payments 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 Financial institution.
Unlike normal home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the home is the borrower’s primary residence. Financial institutions regain their principal, plus interest, once the home is sold. The rest of the value of the home would go to the homeowner or to his / her heirs. You can never owe greater than your home’s appraisal value.
If the sales proceeds are inadequate to cover the balance 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. That is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner can borrow is determined by what their age is, the current interest rates, other loan charges and the appraisal of their home or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your house is, the older that you are, the lower the interest, the more you can borrow.
There isn’t any asset or cash flow limits on homeowners obtaining HUD’s reverse loan.
There are no restrictions on the value of houses getting qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. However, the total amount that could be borrowed comes from the lower of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the property owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount that could be borrowed plus a .5% annual premium.