Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are serving to older home owners in California obtain better financial security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior property owners age Sixty two and older to transform the home equity inside their property into a monthly stream of extra cashflow and/or a credit line to be paid back once they no longer occupy the property.
The loan, often called HECM, is funded from a loan company such as a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making an informed decision of whether the program fulfills their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
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HECM counselors will talk about program qualification requirements, financial consequences and alternatives to obtaining a HECM and specifications for the home loan becoming due and payable. After the conclusion of HECM counseling, the home owner should be able to make an independent, well informed decision of whether or not the product will meet their needs.
California home owners who meet the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Specifications In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and have sizeable home equity
Live in your house as a primary residence
Taking part in a consumer information session offered by an approved 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 history qualifications are required of the applicant
No repayment as long as the house is the primary residence.
Loan 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 homeowner
HUD-approved condos
Manufactured houses on land
Meet FHA property conditions and flood requirements
How the jumbo reverse mortgage in California} Program Works For California Homeowners
Property owners 62 and older which have paid back their mortgage loans or have only small mortgage balances remaining, and are presently living in the property are eligible to participate in HUD’s reverse mortgage program.
The loan permits home-owners to borrow against the equity in their homes. 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 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 options for a nominal fee of $20. Fees may vary based upon Loan provider.
Contrary to standard home equity loans, a HUD reverse mortgage does not need repayment provided that the property is the borrower’s primary residence. Mortgage companies regain their principal, plus interest, once the property is sold. The rest of the value of the property goes to the homeowner or to their survivors. You’re never going to owe greater than your property’s appraised value.
If the sales proceeds are not sufficient to repay the amount due, HUD will pay the financial institution the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The total a homeowner could borrow depends on how old they are, the current interest rates, other loan costs and the appraisal vlaue of their property or FHA ‘s mortgage limits with their area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you could borrow.
There are no asset or cash flow limits on borrowers acquiring HUD’s reverse house loan.
In addition there are no limitations on the value of homes getting qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. However, the amount which can 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% of the maximum claim amount which can be borrowed along with a .5 percent annual premium.