Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are assisting older home owners in California attain additional personal financial stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior home owners age 62 and older to convert the home equity inside their home to a monthly flow of additional cashflow and/or a line of credit to be repaid after they cease to live in the home.
The mortgage loan, commonly known as HECM, is funded from a lender for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the home owner in making a well informed determination of if the program suits their needs, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Pollock, Parkway-South Sacramento, Cordova, Fruitridge Manor, Fruitridge Pocket
HECM counselors will talk about program eligibility requirements, financial consequences and alternatives to getting a HECM and specifications for the mortgage loan becoming due and payable. Upon the completion of HECM counseling, the home owner must be able to make an independent, well informed determination of whether or not this product will satisfy their needs.
California home-owners who satisfy the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Requirements For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property as well as have considerable home equity
Reside in your property as a principal residence
Taking part in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the applicant
No repayment so long as the property is the principal residence.
Loan Costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit lived in by the homeowner
HUD-approved condos
Manufactured houses on land
Meet FHA property conditions and flood requirements
How the local reverse mortgage experts} Program Works For California Homeowners
Property owners 62 and older who have paid back their home loans or have only small home loan amounts outstanding, and are presently residing in the home meet the requirements to take part in HUD’s reverse mortgage program.
The loan makes it possible for home owners 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 circumstances change can restructure their payment options for a nominal fee of $20. Fees can vary depending on Loan company.
Contrary to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the home is the borrower’s principal residence. Mortgage lenders recover their principal, plus interest, whenever the home is sold. The rest of the value of the home goes to the homeowner or to his or her heirs. You’re never going to owe greater than your home’s appraised value.
If the sales funds are insufficient to repay the balance payable, HUD pays off the mortgage lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to supply this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The amount a homeowner could borrow is dependent upon what their age is, current interest rates, other loan charges and the appraisal of their home or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your property is, the older you are, the lower the interest, the more you could borrow.
There aren’t any asset or cash flow limitations on homeowners receiving HUD’s reverse house loan.
In addition there are no limitations on the value of houses getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the amount that could 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 home owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount which can be borrowed plus a .5% annual premium.