Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly residents in California achieve an increased financial stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home owners age Sixty two and older to convert the home equity inside their house to a monthly flow of extra cashflow and/or a line of credit to be paid back after they no longer occupy the house.
The mortgage, commonly known as HECM, is funded by a lending institution such as a mortgage lender, traditional bank, credit union or savings and loan association. To support the home owner in making an informed decision of whether the program suits their needs, they’re required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Arcade, Yolano, Riverview, El Macero, Willow Point
HECM counselors will talk about program qualification requirements, financial consequences and alternatives to getting a HECM and provisions for the mortgage becoming due and payable. After the completion of HECM counseling, the home owner must be able to make an independent, informed decision of whether this product will satisfy their needs.
California home owners who fulfill the eligibility criteria can complete a reverse mortgage application by speaking to a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Specifications For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and also have sizeable home equity
Reside in your house as a principal residence
Taking part in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications will be required of the borrower
No repayment providing the property is the principal residence.
Closing costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condo properties
Manufactured houses on property
Meet FHA property guidelines and flood requirements
How a reverse mortgage company in California} Program Works For California Homeowners
Homeowners 62 and older which have paid off their mortgages or have only small loan balances remaining, and are currently residing in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan makes it possible for homeowners to borrow against the equity in their homes. 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 conditions change can restructure their payment options for a nominal fee of $20. Fees can vary dependent on Financial institution.
Contrary to normal home equity loans, a HUD reverse mortgage does not require repayment provided the house is the borrower’s primary residence. Mortgage companies recover their principal, plus interest, whenever the house is sold. The remaining value of the house would go to the homeowner or to her or his survivors. You’re never going to owe above your house’s appraisal value.
If the sales funds are inadequate to repay the total payable, HUD pays the mortgage lender the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage. This is the great thing about the HUD™ FHA guarantee.
The total a homeowner may borrow is dependent upon how old they are, the current interest rates, other loan charges and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Normally, the more valuable your home is, the older you are, the lower the interest, the more you’ll be able to borrow.
There aren’t any asset or income restrictions on borrowers obtaining HUD’s reverse mortgage.
There are no limitations on the value of homes getting qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. Nevertheless, 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 homeowners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which can be borrowed along with a .5% annual premium.