Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly homeowners in California gain an increased financial stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior home-owners age Sixty two and older to transform the equity in their home to a monthly stream of extra cash flow and/or a credit line to be repaid after they do not live in the home.
The loan, often called HECM, is funded by a lending institution such as a mortgage lender, traditional bank, credit union or savings and loan association. To help the home owner in making a well informed decision of if this program suits their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Green, Valdez, Sorroca, Morgans Landing, Paintersville
HECM counselors will talk about program eligibility conditions, financial consequences and alternatives to getting a HECM and specifications for the mortgage loan becoming due and payable. Upon the completion of HECM counseling, the home owner should be able to make an independent, educated decision of whether this product will satisfy their needs.
California home-owners who satisfy the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Requirements In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home as well as have sizeable equity
Reside in your home as a principal residence
Taking part in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the applicant
No repayment provided the home is the principal residence.
Closing costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit lived in by the homeowner
HUD-approved condos
Manufactured homes on property
Meet FHA property guidelines and flood requirements
How the reverse mortgage home loan} Program Works For California Homeowners
Property owners 62 and older which have repaid their house loans or have only small mortgage balances remaining, and are currently residing in the home meet the criteria to participate in HUD’s reverse mortgage program.
The loan enables homeowners to borrow from 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees can vary depending on Loan provider.
Contrary to ordinary home equity loans, a HUD reverse mortgage does not need repayment as long as the home is the borrower’s primary residence. Mortgage lenders regain their principal, plus interest, when the home is sold. The remainder of the value of the home would go to the homeowner or to their survivors. You can’t ever owe more than your home’s appraised value.
If the sales proceeds are not sufficient to repay the amount owed, HUD pays the lending company the sum of the shortfall. 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 a homeowner may borrow is determined by what their age is, the current interest rate, other loan costs and the appraisal of their home or FHA ‘s mortgage limits with their area, whichever is less. Typically, 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 not any asset or income limits on borrowers acquiring HUD’s reverse mortgage.
There are also no limitations on the value of homes qualifying for a HUD reverse mortgage. The value of the property will be determined by an appraisal. Nonetheless, the 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 homeowners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount which can be borrowed as well as a .5 percent annual premium.