Reverse mortgages (known as Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly homeowners in California attain better personal financial stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home-owners age 62 and older to convert the home equity in their house to a monthly flow of extra cash flow and/or a line of credit to be repaid once they do not live in the house.
The loan, commonly known as HECM, is funded from a mortgage company like a mortgage lender, traditional bank, credit union or savings and loan association. To support the home-owner in making a knowledgeable decision of whether the program fulfills their needs, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Ramona, Perkins, Polk, Fruitridge Manor, Fruitridge Pocket
HECM counselors will talk about program qualification conditions, financial implications and alternatives to receiving a HECM and provisions 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 decision 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 such as 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 property and have considerable home equity
Live 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 for the youngest applicant
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements are required of the applicant
No repayment providing the house is the principal residence.
Costs 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 condo properties
Manufactured homes on property
Meet FHA property standards and flood requirements
How a local reverse mortgage experts} Program Works For California Homeowners
Homeowners 62 and older which have repaid their mortgages or have only small loan balances outstanding, and are also currently residing in the house meet the requirements to participate in HUD’s reverse mortgage loan.
The loan allows homeowners to borrow from 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 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 situations change can restructure their payment selections for a nominal fee of $20. Fees can vary dependent on Loan provider.
As opposed to standard home equity loans, a HUD reverse mortgage doesn’t require repayment provided the house is the borrower’s principal residence. Mortgage lenders regain their principal, plus interest, when the house is sold. The rest of the value of the house goes to the homeowner or to his or her heirs. You can’t ever owe greater than your house’s appraisal value.
If the sales funds are insufficient to pay 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 borrowers to provide this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner could borrow is determined by how old they are, the current interest rates, other loan costs and the appraisal of their house or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your property is, the older that you are, the lower the interest rate, the more you are able to borrow.
There are not any asset or cash flow restrictions on borrowers obtaining HUD’s reverse mortgage.
There are also no restrictions on the value of houses qualifying for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the amount which can 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 get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount which can be borrowed along with a .5 percent annual premium.