Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are assisting elderly homeowners in California gain greater monetary stability and enjoy their retirement 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 inside their home to a monthly flow of extra cashflow and/or a credit line to be repaid once they do not inhabit the home.
The mortgage, often called HECM, is funded by a lending institution such as a mortgage lender, traditional bank, credit union or savings and loan association. To assist the homeowner in making an educated determination of whether this program meets their needs, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Woodland, Woodlands Mobile Home Park, Royal Palms Mobile Estates, Yolo, Idle Wheel Mobile Estates
HECM counselors will talk about program eligibility conditions, financial implications and alternatives to getting a HECM and provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, the homeowner should be able to make an independent, well informed determination of whether the product will satisfy their needs.
California home owners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lender like a bank, mortgage company, or savings and loan association.
Borrower Standards To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property and have substantial home equity
Occupy your property as a primary residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the borrower
No repayment provided the home is the primary residence.
Mortgage Fees may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the homeowner
HUD-approved condos
Manufactured homes on land
Meet FHA property guidelines and flood requirements
How a Home Equity Conversion Mortgage in California} Program Works For California Homeowners
Home owners 62 and older that have paid off their mortgages or have only small loan balances outstanding, and are also presently residing in the home are eligible to participate in HUD’s reverse mortgage loan.
The loan enables home-owners to borrow from the equity in their properties. 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 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 circumstances change can restructure their payment selections for a nominal fee of $20. Fees could differ depending on Financial institution.
As opposed to regular home equity loans, a HUD reverse mortgage does not need repayment providing the home is the borrower’s principal residence. Mortgage lenders recover their principal, plus interest, when the home is sold. The remainder of the value of the home goes to the homeowner or to their survivors. You’re never going to owe greater than your home’s appraised value.
If the sales proceeds are not enough to cover the total payable, HUD will pay the mortgage lender the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. That is the beauty of the HUD™ FHA guarantee.
The total amount a homeowner can borrow is determined by what their age is, current interest rates, 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 that you are, the lower the interest, the more you are able to borrow.
There isn’t any asset or income limitations on borrowers receiving HUD’s reverse house loan.
There are no restrictions on the value of properties getting qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, the total which can be borrowed comes 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 which is 2% of the maximum claim amount that may be borrowed along with a .5 percent annual premium.