Reverse mortgages (often called Home Equity Conversion Mortgages, shortened to HECM) are helping elderly homeowners in California gain better economical stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior homeowners age 62 and older to convert the equity inside their home to a monthly flow of extra cashflow and/or a credit line to be repaid after they no longer occupy the home.
The home loan, also known as HECM, is funded by a lending institution for example a mortgage lender, traditional bank, credit union or savings and loan association. To support the homeowner in making an educated decision of if this program meets their needs, they are required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Ensley, Verona, Cunard, Joes Landing, Marchant
HECM counselors will talk about program qualification conditions, financial consequences and alternatives to getting a HECM and specifications for the mortgage becoming due and payable. Upon the conclusion of HECM counseling, the homeowner must be able to make an independent, educated decision of whether or not this product will satisfy their needs.
California home owners who fulfill the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution like a bank, loan company, or savings and loan association.
Borrower Criteria In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and also have sizeable equity
Occupy your property as a primary residence
Taking part in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements are required of the applicant
No repayment as long as the property 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 borrower
HUD-approved condos
Manufactured homes on property
Meet FHA property specifications and flood requirements
How a reverse mortgage home loan in California} Program Works For California Homeowners
Home owners 62 and older that have paid back their home loans or have only small home loan balances outstanding, and are also currently living in the home meet the requirements to participate in HUD’s reverse mortgage program.
The loan allows 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 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees can vary dependant upon Loan company.
As opposed to normal home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the home is the borrower’s primary residence. Lenders recover their principal, plus interest, whenever the home is sold. The remaining value of the home goes to the homeowner or to her or his heirs. You can never owe more than your home’s appraisal value.
If the sales funds are not sufficient to cover the amount owed, HUD will pay the financial institution the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow is dependent upon their age, current interest rate, other loan costs and the appraisal of their home or FHA ‘s mortgage limits for 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 aren’t any asset or cash flow limits on homeowners acquiring HUD’s reverse mortgage.
Additionally, there are no restrictions on the value of houses getting qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. However, the total amount that could be borrowed is derived from the lesser of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the property owners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount that could be borrowed and then a .5% annual premium.