Reverse mortgages (generally known as Home Equity Conversion Mortgages, abbreviated to HECM) are assisting elderly people in California reach greater financial 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 transform the home equity in their house into a monthly flow of additional cash flow and/or a line of credit to be paid back when they do not occupy the house.
The home loan, also known as HECM, is funded from a lending institution for example a mortgage lender, bank, credit union or savings and loan association. To assist the home-owner in making a knowledgeable decision of if this program meets their needs, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Point Pleasant, Franklin, Hicksville, Hood Junction, Elk Grove
HECM counselors will discuss program qualification requirements, financial implications and alternatives to receiving a HECM and provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, the home-owner must be able to make an independent, educated decision of whether the product will satisfy their needs.
California home owners who satisfy the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lender like 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 significant home equity
Live in your home as a principal residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the homeowner
No repayment provided the property is the principal residence.
Loan Costs may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit lived in by the homeowner
HUD-approved condominiums
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How a local reverse mortgage} Program Works For California Homeowners
Home owners 62 and older that have repaid their mortgage loans or have only small loan balances remaining, and are currently residing in the house are eligible to participate in HUD’s reverse mortgage loan.
The loan permits homeowners to borrow against 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 Lender.
As opposed to normal home equity loans, a HUD reverse mortgage does not require repayment provided the house is the borrower’s principal residence. Mortgage companies recover their principal, plus interest, when the house is sold. The remaining value of the house would go to the homeowner or to his or her survivors. You can’t ever owe in excess of your house’s appraised value.
If the sales funds are not sufficient to pay the total payable, HUD pays the lending company the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner may borrow will depend on their age, current interest rates, other loan charges and the appraisal vlaue of their house or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your property is, the older that you are, the lower the interest, the more you’ll be able to borrow.
There aren’t any asset or cash flow limitations on homeowners obtaining HUD’s reverse mortgage.
There are no limits on the value of houses being qualified for a HUD reverse mortgage. The value of the property will be determined by an appraisal. Nonetheless, the total that may 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 receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that could be borrowed plus a .5 percent annual premium.