Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are assisting older home owners in California achieve an increased economical stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior home-owners age 62 and older to convert the equity inside their house into a monthly flow of extra cashflow and/or a line of credit to be paid back once they cease to inhabit the house.
The mortgage, often called HECM, is funded by a mortgage company for example a mortgage lender, traditional bank, credit union or savings and loan association. To support the homeowner in making an informed decision 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: Walerga, Foothill Farms, McClellan Park, Sabre City, Antelope
HECM counselors will discuss program eligibility conditions, financial consequences and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. Upon the completion of HECM counseling, the homeowner will be able to make an independent, educated decision of whether the product will satisfy their needs.
California home owners who satisfy the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lender like a bank, mortgage company, or savings and loan association.
Borrower Standards When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and also have substantial equity
Occupy your house as a primary residence
Participation in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest applicant
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications will be required of the applicant
No repayment provided the property is the primary residence.
Closing costs 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 homes on property
Meet FHA property guidelines and flood requirements
How a FHA reverse mortgage in California} Program Works For California Homeowners
Home owners 62 and older which have paid in full their mortgages or have only small home loan amounts remaining, and are presently residing in the house meet the requirements to take part in HUD’s reverse mortgage program.
The loan permits home owners to borrow on the equity in their houses. 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 line of credit with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly installments for a fixed period of months selected by the borrower.
Homeowners whose circumstances change can restructure their payment selections for a nominal fee of $20. Fees could differ depending on Loan company.
Unlike standard home equity loans, a HUD reverse mortgage doesn’t require repayment provided the house is the borrower’s primary residence. Lenders recover their principal, plus interest, when the house is sold. The rest of the value of the house goes to the homeowner or to their heirs. You’re never going to owe above your house’s appraised value.
If the sales funds are not enough to pay the balance payable, HUD pays off the mortgage lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. That is the great thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow is dependent on how old they are, current interest rates, other loan charges and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your home is, the older you are, the lower the interest rate, the more you could borrow.
There are no asset or cash flow restrictions on borrowers acquiring HUD’s reverse home loan.
There are no limits on the value of houses being qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the total amount that may be borrowed comes 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 that is 2% of the maximum claim amount which can be borrowed as well as a .5 percent annual premium.