Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are serving to older homeowners in California attain improved financial security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior home owners age 62 and older to transform the equity in their property to a monthly stream of additional cashflow and/or a credit line to be repaid when they no longer occupy the property.
The mortgage, often called HECM, is funded from a lender like a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a well informed decision of whether the program suits their requirements, they’re required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Rio Linda, Elverta, Del Paso, Robla, Riego
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 conclusion of HECM counseling, the home owner must be able to make an independent, educated decision 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 lender such as a bank, mortgage company, or savings and loan association.
Borrower Standards For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and have significant equity
Reside in your house as a primary residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the homeowner
No repayment providing the house is the primary residence.
Costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condo properties
Manufactured houses on property
Meet FHA property requirements and flood requirements
How the local reverse mortgage specialist} Program Works For California Homeowners
Homeowners 62 and older that have repaid their mortgage loans or have only small mortgage amounts outstanding, and are also currently living in the property meet the requirements to take part in HUD’s reverse mortgage loan.
The loan allows property owners to borrow against the equity in their homes. 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 credit line with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly installments 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 dependent on Lender.
Unlike normal home equity loans, a HUD reverse mortgage does not require repayment providing the property is the borrower’s primary residence. Financial institutions regain their principal, plus interest, whenever the property is sold. The remainder of the value of the property would go to the homeowner or to their survivors. You can never owe above your property’s appraisal value.
If the sales funds are not enough to pay the amount owed, HUD pays off the lending company the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. This is the beauty of the HUD™ FHA guarantee.
The total amount a homeowner may borrow depends on what their age is, the current interest rates, other loan costs and the appraisal vlaue of their property or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your home is, the older that you are, the lower the interest rate, the more you can borrow.
There aren’t any asset or cash flow restrictions on borrowers acquiring HUD’s reverse house loan.
There’s also no restrictions on the value of homes getting qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the amount that could be borrowed is derived from the lesser of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the property owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which can be borrowed as well as a .5 percent annual premium.