Reverse mortgages (often called Home Equity Conversion Mortgages, shortened to HECM) are assisting older homeowners in California gain better economical security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior homeowners age Sixty two and older to convert the home equity in their home into a monthly flow of extra cash flow and/or a line of credit to be repaid when they cease to inhabit the home.
The loan, also known as HECM, is funded from a lender like a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a well informed determination of whether the program meets their requirements, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Ramona, Brighton, Polk, Manlove, Rosemont
HECM counselors will talk about program qualification requirements, financial consequences and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the home owner will be able to make an independent, informed determination of whether the product will satisfy their requirements.
California home-owners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution such as a bank, loan company, or savings and loan association.
Borrower Specifications To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and have substantial home equity
Occupy your house as a primary residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the applicant
No repayment as long as the home is the primary residence.
Costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit lived in by the homeowner
HUD-approved condominiums
Manufactured homes on property
Meet FHA property conditions and flood requirements
How the reverse mortgage company} Program Works For California Homeowners
Homeowners 62 and older which have paid off their house loans or have only small home loan amounts remaining, and are currently residing in the home meet the criteria to take part in HUD’s reverse mortgage program.
The loan makes it possible for home owners to borrow from the equity in their homes. 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 options for a nominal fee of $20. Fees may vary dependant upon Loan provider.
Unlike standard home equity loans, a HUD reverse mortgage does not need repayment providing the home is the borrower’s primary residence. Loan providers recover their principal, plus interest, once 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 total amount owed, HUD will pay the financial institution the sum 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 great thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow is dependent on what their age is, the current interest rate, other loan charges and the appraisal of their home or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your property is, the older you are, the lower the interest, the more you’ll be able to borrow.
There isn’t any asset or cash flow limitations on borrowers receiving HUD’s reverse loan.
There’s also no limits on the value of homes being qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nevertheless, the total amount that could 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 receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount which may be borrowed along with a .5% annual premium.