Reverse mortgages (known as Home Equity Conversion Mortgages, abbreviated to HECM) are assisting older homeowners in California obtain improved economical security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to transform the equity in their home into a monthly stream of additional cash flow and/or a line of credit to be repaid once they do not live in the home.
The mortgage loan, typically referred to as HECM, is funded from a mortgage company such as a mortgage lender, traditional bank, credit union or savings and loan association. To help the homeowner in making an educated determination of whether this program fulfills their requirements, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Swingle, Rancho Yolo Mobile Home Park, Royal Oak Manufactured Home Community, Webster, Davis Mobile Estates
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to getting a HECM and specifications for the home loan becoming due and payable. Upon the completion of HECM counseling, the homeowner will be able to make an independent, educated determination of whether or not the product will satisfy 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 such as a bank, mortgage company, or savings and loan association.
Borrower Requirements When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and also have substantial equity
Occupy your home as a principal residence
Participation in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications are required of the homeowner
No repayment so long as the home is the principal residence.
Mortgage Fees 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 houses on land
Meet FHA property specifications and flood requirements
How a HECM in California} Program Works For California Homeowners
Home-owners 62 and older who have paid off their home loans or have only small mortgage balances outstanding, and are also presently residing in the home are eligible to take part in HUD’s reverse mortgage loan.
The loan permits property owners to borrow from the equity in their houses. 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 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 circumstances change can restructure their payment selections for a nominal fee of $20. Fees could differ dependent on Loan company.
As opposed to standard home equity loans, a HUD reverse mortgage does not require repayment providing the home is the borrower’s primary residence. Mortgage companies regain their principal, plus interest, when the home is sold. The remaining value of the home goes to the homeowner or to his / her heirs. You’re never going to owe more than your home’s appraised value.
If the sales proceeds are inadequate to cover the total due, HUD will pay the lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to provide this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner could borrow depends upon what their age is, current interest rate, other loan fees and the appraisal vlaue of their home or FHA ‘s mortgage limits with their area, whichever is less. Normally, the more valuable your house is, the older that you are, the lower the rate, the more you are able to borrow.
There aren’t any asset or income limitations on homeowners obtaining HUD’s reverse home loan.
Additionally, there are no limitations on the value of houses being qualified for a HUD reverse mortgage. The value of the house will be determined by an appraisal. However, the total 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 property owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that could be borrowed as well as a .5 percent annual premium.