Reverse mortgages (often called Home Equity Conversion Mortgages, shortened to HECM) are serving to older homeowners in California obtain improved financial security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior property owners age 62 and older to convert the home equity in their home into a monthly flow of additional cash flow and/or a line of credit to be repaid when they no longer live in the home.
The mortgage, often called HECM, is funded by a mortgage company such as a mortgage lender, traditional bank, credit union or savings and loan association. To help the homeowner in making an educated decision of if this program satisfies their requirements, they’re required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Cunard, Ensley, Marchant, Karnak, King Farms
HECM counselors will discuss program eligibility requirements, 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 homeowner should be able to make an independent, well informed decision of whether or not the product will satisfy their requirements.
California home owners who fulfill the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender like a bank, mortgage company, or savings and loan association.
Borrower Specifications In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home as well as have sizeable home equity
Reside in your house as a principal residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications will be required of the homeowner
No repayment so long as the property is the principal residence.
Fee may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condominiums
Manufactured houses on land
Meet FHA property conditions and flood requirements
How the reverse mortgage lenders} Program Works For California Homeowners
Home owners 62 and older who have repaid their home loans or have only small mortgage balances remaining, and are presently living in the home meet the criteria to participate in HUD’s reverse mortgage program.
The loan enables 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 situations change can restructure their payment options for a nominal fee of $20. Fees could differ based upon Loan company.
In contrast to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment provided that the home is the borrower’s primary residence. Loan companies regain their principal, plus interest, once the home is sold. The remainder of the value of the home goes to the homeowner or to his / her survivors. You can’t ever owe in excess of your home’s appraisal value.
If the sales funds are not enough to pay the balance owed, HUD pays off the lending company the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow depends upon how old they are, the current interest rates, other loan costs and the appraisal vlaue of their home or FHA ‘s mortgage limits for their area, whichever is less. Usually, 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 are not any asset or cash flow restrictions on homeowners obtaining HUD’s reverse home loan.
There are also no limitations on the value of houses getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nonetheless, the total that could 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 homeowners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount which can be borrowed plus a .5 percent annual premium.