Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are serving to elderly people in California gain better personal financial security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to convert the home equity inside their house to a monthly stream of extra cashflow and/or a line of credit to be repaid when they cease to live in the house.
The mortgage loan, commonly known as HECM, is funded from a lender like a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making an informed decision of if this program meets their needs, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Robla, Bombay, Hagginwood, Gardenland, Rio Linda
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to receiving a HECM and provisions for the mortgage loan becoming due and payable. Upon the conclusion of HECM counseling, the home owner should be able to make an independent, educated decision of whether this product will satisfy their needs.
California home-owners who satisfy the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association.
Borrower Specifications To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and also have considerable home equity
Occupy your house as a principal residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements will be required of the homeowner
No repayment provided that the house is the principal residence.
Mortgage Fees may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condominiums
Manufactured homes on land
Meet FHA property specifications and flood requirements
How the HECM in California} Program Works For California Homeowners
Homeowners 62 and older who have paid off their home loans or have only small home loan amounts remaining, and are also presently residing in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan enables homeowners to borrow on the equity in their properties. Homeowners can choose 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 selections for a nominal fee of $20. Fees may vary depending on Financial institution.
Unlike regular home equity loans, a HUD reverse mortgage doesn’t require repayment provided that the house is the borrower’s principal residence. Mortgage companies regain their principal, plus interest, once the house is sold. The remainder of the value of the house goes to the homeowner or to their heirs. You’re never going to owe greater than your house’s appraised value.
If the sales funds are not sufficient to cover the total amount due, HUD pays off the lending company the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow is dependent upon their age, the current interest rate, other loan costs and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your house is, the older you are, the lower the interest, the more you are able to borrow.
There isn’t any asset or cash flow restrictions on homeowners receiving HUD’s reverse home loan.
In addition there are no restrictions on the value of properties being qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, the total that may 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 homeowners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that could be borrowed as well as a .5% annual premium.