Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are aiding older home owners in California obtain an increased monetary stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior homeowners age Sixty two and older to convert the equity in their property to a monthly stream of additional cash flow and/or a line of credit to be paid back after they do not inhabit the property.
The home loan, often called HECM, is funded from a lender such as a mortgage lender, bank, credit union or savings and loan association. To support the home-owner in making a knowledgeable decision of whether this program suits their requirements, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Laguna West, Laguna, Franklin, Clarksburg, Freeport
HECM counselors will discuss program eligibility conditions, financial implications and alternatives to getting a HECM and specifications for the house loan becoming due and payable. After the completion of HECM counseling, the home-owner will be able to make an independent, educated decision of whether or not this product will fulfill their requirements.
California home owners who fulfill the eligibility criteria can complete a reverse mortgage application by speaking to a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association.
Borrower Criteria For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home as well as have substantial equity
Occupy your home as a principal residence
Participation in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the applicant
No repayment providing the home is the principal residence.
Loan Costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condos
Manufactured houses on land
Meet FHA property requirements and flood requirements
How a local reverse mortgage lender} Program Works For California Homeowners
Home-owners 62 and older that have paid off their mortgage loans or have only small home loan balances remaining, and are also currently living in the property are eligible to take part in HUD’s reverse mortgage loan.
The loan makes it possible for homeowners to borrow from the equity in their homes. 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 line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly payments 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 may vary dependent on Financial institution.
Unlike ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment provided that the property is the borrower’s principal residence. Mortgage companies regain their principal, plus interest, whenever the property is sold. The remaining value of the property would go to the homeowner or to their heirs. You can never owe more than your property’s appraised value.
If the sales proceeds are not sufficient to cover the total owed, HUD pays off the lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. That is the great thing about the HUD™ FHA guarantee.
The total amount a homeowner could borrow will depend on their age, current interest rate, other loan charges and the appraisal vlaue of their property or FHA ‘s mortgage limits with their area, whichever is less. Normally, the more valuable your property is, the older you are, the lower the rate, the more you can borrow.
There isn’t any asset or income restrictions on homeowners obtaining HUD’s reverse mortgage.
There’s also no limitations on the value of homes getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nonetheless, the amount that may 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 homeowners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that could be borrowed plus a .5% annual premium.