Reverse mortgages (generally known as Home Equity Conversion Mortgages, abbreviated to HECM) are aiding elderly home owners in California reach better economical stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to convert the equity inside their house into a monthly flow of additional cashflow and/or a credit line to be repaid after they do not occupy the house.
The mortgage, typically referred to as HECM, is funded from a lender for example a mortgage lender, bank, credit union or savings and loan association. To help the home-owner in making an informed decision of if this program meets their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Alder Creek, Gold River, Natoma, Citrus, Folsom Junction
HECM counselors will talk about program eligibility requirements, financial consequences and alternatives to receiving a HECM and provisions for the house loan becoming due and payable. Upon the conclusion of HECM counseling, the home-owner should be able to make an independent, well informed decision of whether this product will satisfy their needs.
California homeowners who meet the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Requirements In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and also have sizeable equity
Live in your home as a primary residence
Taking part in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the homeowner
No repayment providing the home is the primary residence.
Fee may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit lived in by the borrower
HUD-approved condos
Manufactured homes on property
Meet FHA property requirements and flood requirements
How a reverse home loan} Program Works For California Homeowners
Home-owners 62 and older who have paid off their mortgage loans or have only small home loan balances remaining, and are presently residing in the house meet the requirements to participate in HUD’s reverse mortgage loan.
The loan allows property owners to borrow from the equity in their properties. 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 situations change can restructure their payment selections for a nominal fee of $20. Fees may vary dependant upon Loan company.
Unlike ordinary home equity loans, a HUD reverse mortgage does not need repayment so long as the house is the borrower’s primary residence. Lenders regain their principal, plus interest, once the house is sold. The remainder of the value of the house would go to the homeowner or to their survivors. You can never owe in excess of your house’s appraised value.
If the sales funds are not sufficient to cover the amount due, HUD pays off the mortgage lender the amount of the shortfall. 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 a homeowner can borrow depends upon what their age is, current interest rate, other loan charges and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your home is, the older that you are, the lower the interest, the more you could borrow.
There are not any asset or income restrictions on homeowners acquiring HUD’s reverse loan.
In addition there are no restrictions on the value of properties being qualified for a HUD reverse mortgage. The value of the home is 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 property owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which may be borrowed along with a .5 percent annual premium.