Reverse mortgages (also known as Home Equity Conversion Mortgages, abbreviated to HECM) are assisting elderly residents in California attain additional monetary stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior property owners age Sixty two and older to convert the home equity in their home into a monthly stream of additional cashflow and/or a line of credit to be repaid when they cease to live in the home.
The mortgage loan, also known as HECM, is funded by a mortgage company such as a mortgage lender, bank, credit union or savings and loan association. To assist the home-owner in making a knowledgeable determination of whether this program satisfies their needs, they’re required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Rancho Cordova, Soudan, Mayhew, Citrus, La Riviera
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 home-owner will be able to make an independent, educated determination of whether or not this product will meet their needs.
California home owners who meet the eligibility criteria 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 Requirements For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home and have considerable home equity
Live in your house as a principal residence
Participation in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements are required of the borrower
No repayment as long as the house is the principal residence.
Closing costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condo properties
Manufactured houses on land
Meet FHA property specifications and flood requirements
How the reverse home loan in California} Program Works For California Homeowners
Home-owners 62 and older which have paid off their mortgages or have only small mortgage amounts remaining, and are currently living in the home meet the criteria to participate in HUD’s reverse mortgage loan.
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 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 line of credit with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly installments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment selections for a nominal fee of $20. Fees could differ based upon Loan provider.
Unlike standard home equity loans, a HUD reverse mortgage doesn’t require repayment provided the home is the borrower’s principal residence. Mortgage lenders recover their principal, plus interest, once the home is sold. The rest of the value of the home would go to the homeowner or to his or her survivors. You can’t ever owe in excess of your home’s appraised value.
If the sales funds are not sufficient to repay the balance payable, HUD pays 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. That is the beauty of the HUD™ FHA guarantee.
The total amount a homeowner could borrow depends on what their age is, the current interest rate, other loan charges and the appraisal vlaue of their home or FHA ‘s mortgage limits with their area, whichever is less. Generally, the more valuable your house is, the older you are, the lower the interest, the more you are able to borrow.
There isn’t any asset or cash flow limits on borrowers receiving HUD’s reverse mortgage.
There are no restrictions on the value of houses being qualified for a HUD reverse mortgage. The value of the house will be determined by an appraisal. Nonetheless, the amount 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which may be borrowed plus a .5% annual premium.