Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are assisting older home owners in California attain improved personal financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior homeowners age Sixty two and older to transform the equity in their home to a monthly flow of additional cashflow and/or a line of credit to be paid back after they cease to inhabit the home.
The home loan, also known as HECM, is funded from a lender for example a mortgage lender, bank, credit union or savings and loan association. To support the home owner in making a well informed determination of whether the program suits their needs, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Joes Landing, Karnak, Ensley, Cunard, Marchant
HECM counselors will talk about program qualification requirements, financial implications and alternatives to receiving a HECM and provisions for the home loan becoming due and payable. Upon the completion of HECM counseling, the home owner must be able to make an independent, informed determination of whether or not the product will fulfill their needs.
California home owners who meet the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lending institution like a bank, loan company, or savings and loan association.
Borrower Criteria In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have substantial equity
Occupy your home 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 rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit requirements are required of the homeowner
No repayment providing 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 condos
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How a reverse mortgage home loan in California} Program Works For California Homeowners
Property owners 62 and older which have repaid their home loans or have only small mortgage amounts outstanding, and are also currently living in the home meet the criteria to participate in HUD’s reverse mortgage program.
The loan allows home owners to borrow on the equity in their homes. 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 situations change can restructure their payment selections for a nominal fee of $20. Fees could differ dependant upon Lender.
As opposed to standard home equity loans, a HUD reverse mortgage does not need repayment so long as the home is the borrower’s principal residence. Loan companies recover their principal, plus interest, whenever the home is sold. The rest of the value of the home would go to the homeowner or to her or his survivors. You can never owe greater than your home’s appraised value.
If the sales proceeds are insufficient to cover the balance payable, HUD pays off the mortgage 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. That is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner may borrow is dependent upon how old they are, current interest rate, other loan fees and the appraised value of their home or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your house is, the older you are, the lower the rate, the more you’ll be able to borrow.
There are not any asset or cash flow limitations on homeowners obtaining HUD’s reverse house loan.
Additionally, there are no restrictions on the value of homes qualifying for a HUD reverse mortgage. The value of the house will be determined by an appraisal. Nonetheless, the amount that could 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that could be borrowed along with a .5 percent annual premium.