Reverse mortgages (generally known as Home Equity Conversion Mortgages, abbreviated to HECM) are assisting older homeowners in California reach better financial stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior home-owners age 62 and older to transform the equity inside their home to a monthly stream of additional cashflow and/or a line of credit to be paid back when they no longer inhabit the home.
The mortgage loan, commonly known as HECM, is funded from a loan company such as a mortgage lender, traditional bank, credit union or savings and loan association. To assist the homeowner in making a well informed determination of if this program satisfies their needs, they’re required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Parkway, Cordova, Parkway-South Sacramento, Freeport, Fruitridge Manor
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to obtaining a HECM and specifications for the home loan becoming due and payable. After the conclusion of HECM counseling, the homeowner should be able to make an independent, well informed determination of whether or not this product will satisfy their needs.
California homeowners who satisfy the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lender such as a bank, loan company, or savings and loan association.
Borrower Specifications To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and have considerable equity
Occupy your house as a primary residence
Participation in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications are required of the homeowner
No repayment provided that the property is the primary residence.
Loan 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 condos
Manufactured homes on land
Meet FHA property standards and flood requirements
How a jumbo reverse mortgage} Program Works For California Homeowners
Home owners 62 and older which have paid off their home loans or have only small home loan balances remaining, and are also currently living in the home meet the requirements to take part in HUD’s reverse mortgage program.
The loan permits home owners to borrow from the equity in their houses. Homeowners can choose 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 conditions change can restructure their payment options for a nominal fee of $20. Fees could differ based upon Loan company.
As opposed to standard home equity loans, a HUD reverse mortgage does not need repayment provided that the home is the borrower’s primary residence. Mortgage companies recover their principal, plus interest, whenever the home is sold. The rest of the value of the home would go to the homeowner or to her or his heirs. You can never owe greater than your home’s appraisal value.
If the sales funds are not enough to repay the amount owed, HUD pays off the financial institution the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow is dependent on how old they are, current interest rate, other loan fees and the appraisal vlaue of their home or FHA ‘s mortgage limits for their area, whichever is less. Generally, the more valuable your house is, the older you are, the lower the interest rate, the more you’ll be able to borrow.
There are not any asset or cash flow restrictions on borrowers acquiring HUD’s reverse mortgage.
There’s also no restrictions on the value of houses qualifying for a HUD reverse mortgage. The value of the house is determined by an appraisal. However, the total which can 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 home owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount which may be borrowed along with a .5 percent annual premium.