Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are helping elderly home owners in California reach greater monetary security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior homeowners age Sixty two and older to convert the home equity in their home to a monthly flow of extra cashflow and/or a credit line to be paid back after they cease to inhabit the home.
The home loan, commonly known as HECM, is funded from a lender such as a mortgage lender, traditional bank, credit union or savings and loan association. To assist the home owner in making an educated determination of whether this program suits their requirements, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: North Sacramento, Ben Ali, Hagginwood, Elvas, Gardenland
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to receiving a HECM and provisions for the home loan becoming due and payable. After the conclusion of HECM counseling, the home owner should be able to make an independent, well informed determination of whether the product will meet their requirements.
California home-owners who satisfy the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Criteria When Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property and have sizeable home equity
Reside in your house as a principal residence
Participation in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
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 as long as the house is the principal residence.
Fee may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condos
Manufactured houses on property
Meet FHA property specifications and flood requirements
How the Home Equity Conversion Mortgage in California} Program Works For California Homeowners
Home owners 62 and older that have paid in full their mortgage loans or have only small loan balances outstanding, and are also currently living in the home meet the criteria to take part in HUD’s reverse mortgage program.
The loan enables property owners to borrow from the equity in their properties. 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 credit line with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly payments 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 may vary dependent on Loan provider.
As opposed to normal home equity loans, a HUD reverse mortgage does not need repayment so long as the home is the borrower’s principal residence. Loan providers regain their principal, plus interest, once 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’t ever owe greater than your home’s appraisal value.
If the sales funds are not enough to cover the balance payable, HUD will pay the lending company the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to provide this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow depends on what their age is, current interest rates, other loan costs and the appraised value of their home or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your home is, the older that you are, the lower the interest rate, the more you’re able to borrow.
There isn’t any asset or cash flow limitations on homeowners acquiring HUD’s reverse home loan.
In addition there are no limits on the value of properties getting qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the total amount that may be borrowed is derived 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 that could be borrowed along with a .5 percent annual premium.