Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are helping older people in California obtain better personal financial security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior homeowners age Sixty two and older to convert the home equity inside their home into a monthly stream of extra cash flow and/or a line of credit to be repaid when they do not live in the home.
The mortgage loan, typically referred to as HECM, is funded by a lender like a mortgage lender, bank, credit union or savings and loan association. To support the home-owner in making a well informed determination of whether the program satisfies their needs, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Riego, Sankey, Elverta, Bombay, Rio Linda
HECM counselors will discuss program qualification requirements, financial implications and alternatives to obtaining a HECM and provisions for the home loan becoming due and payable. Upon the completion of HECM counseling, the home-owner will be able to make an independent, well informed determination of whether this product will fulfill their needs.
California homeowners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Requirements When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home as well as have significant home equity
Occupy your house as a primary residence
Taking part in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications will be required of the borrower
No repayment provided the home is the primary residence.
Fee 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 condos
Manufactured homes on property
Meet FHA property requirements and flood requirements
How the Home Equity Conversion Mortgage in California} Program Works For California Homeowners
Home-owners 62 and older that have paid off their mortgage loans or have only small mortgage amounts outstanding, and are presently residing in the home are eligible to take part in HUD’s reverse mortgage program.
The loan makes it possible for homeowners to borrow on the equity in their houses. 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 can vary dependant upon Loan provider.
Unlike normal home equity loans, a HUD reverse mortgage doesn’t require repayment provided the home is the borrower’s principal residence. Loan providers regain their principal, plus interest, when the home is sold. The rest of the value of the home goes to the homeowner or to his / her survivors. You’re never going to owe greater than your home’s appraisal value.
If the sales funds are insufficient to cover the total amount due, HUD pays off the lending company the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to supply this coverage. This is the beauty of the HUD™ FHA guarantee.
The total amount a homeowner can borrow is dependent on what their age is, current interest rates, 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’ll be able to borrow.
There isn’t any asset or cash flow restrictions on homeowners obtaining HUD’s reverse mortgage.
There are also no limitations on the value of houses being qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the total that may 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% of the maximum claim amount which can be borrowed as well as a .5 percent annual premium.