Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are helping older homeowners in California obtain an increased personal financial security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior home owners age Sixty two and older to transform the equity inside their house into a monthly stream of additional cashflow and/or a line of credit to be repaid when they do not live in the house.
The home loan, often called HECM, is funded by a lender like a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a knowledgeable determination of if the program suits their requirements, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Courtland, Paintersville, Valdez, Sorroca, Randall
HECM counselors will talk about program eligibility conditions, financial consequences and alternatives to receiving a HECM and provisions for the mortgage becoming due and payable. After the conclusion of HECM counseling, the home owner must be able to make an independent, informed determination of whether or not this product will satisfy their requirements.
California home owners who meet the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution such as a bank, loan company, or savings and loan association.
Borrower Standards To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and have considerable equity
Live in your house as a primary residence
Taking part in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications are required of the borrower
No repayment provided that the property is the primary residence.
Fee may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condominiums
Manufactured homes on property
Meet FHA property requirements and flood requirements
How a reverse mortgages in California} Program Works For California Homeowners
Property owners 62 and older who have paid back their mortgages or have only small home loan amounts outstanding, and are also currently residing in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan permits 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 options for a nominal fee of $20. Fees could differ based upon Financial institution.
Unlike standard home equity loans, a HUD reverse mortgage does not require repayment provided that the house is the borrower’s primary residence. Loan providers regain their principal, plus interest, once the house is sold. The rest of the value of the house would go to the homeowner or to their heirs. You can never owe in excess of your house’s appraised value.
If the sales funds are inadequate to cover the balance payable, HUD will pay the financial institution the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total amount a homeowner can borrow is determined by what their age is, current interest rates, other loan charges and the appraisal vlaue of their house 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 rate, the more you can borrow.
There are no asset or income limits on homeowners obtaining HUD’s reverse home loan.
Additionally, there are 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 total amount which can be borrowed comes 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 which can be borrowed and then a .5% annual premium.