Reverse mortgages (often called Home Equity Conversion Mortgages, shortened to HECM) are helping older people in California achieve better personal financial security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior home owners age Sixty two and older to convert the equity in their house into a monthly flow of additional cash flow and/or a credit line to be paid back after they cease to live in the house.
The loan, typically referred to as HECM, is funded from a lending institution like a mortgage lender, traditional bank, credit union or savings and loan association. To help the home owner in making an educated determination of if this program meets their requirements, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Royal Oak Manufactured Home Community, Davis, Davis Mobile Estates, El Macero, Swingle
HECM counselors will discuss program qualification conditions, financial implications and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the home owner should be able to make an independent, well informed determination of whether this product will satisfy their requirements.
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, mortgage company, or savings and loan association.
Borrower Standards For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and also have sizeable equity
Occupy your house as a principal residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications are required of the applicant
No repayment as long as the property is the principal residence.
Mortgage Fees may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the homeowner
HUD-approved condominiums
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How a reverse mortgage} Program Works For California Homeowners
Homeowners 62 and older which have paid back their mortgage loans or have only small mortgage balances remaining, and are currently living in the house are eligible to take part in HUD’s reverse mortgage program.
The loan makes it possible for home-owners to borrow from the equity in their properties. 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 credit line with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment options for a nominal fee of $20. Fees may vary dependent on Loan company.
Unlike normal home equity loans, a HUD reverse mortgage does not need repayment providing the house is the borrower’s principal residence. Mortgage companies recover their principal, plus interest, once the house is sold. The remaining value of the house goes to the homeowner or to her or his survivors. You’re never going to owe greater than your house’s appraisal value.
If the sales proceeds are inadequate to cover the total due, HUD will pay the financial institution the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner could borrow depends upon how old they are, current interest rate, other loan fees and the appraisal vlaue of their house 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 rate, the more you are able to borrow.
There aren’t any asset or income restrictions on homeowners receiving HUD’s reverse home loan.
There are no limits on the value of properties being qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nevertheless, the amount that could be borrowed is derived 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 which is 2% of the maximum claim amount which may be borrowed as well as a .5 percent annual premium.