Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly home owners in California attain additional personal financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior homeowners age 62 and older to transform the equity inside their property into a monthly stream of extra cash flow and/or a line of credit to be paid back after they no longer inhabit the property.
The loan, often called HECM, is funded from a lending institution like a mortgage lender, bank, credit union or savings and loan association. To support the homeowner in making a well informed determination of whether this program fulfills their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Ramona, Perkins, Brighton, Fruitridge Manor, Florin
HECM counselors will talk about program qualification requirements, financial implications and alternatives to getting a HECM and provisions for the home loan becoming due and payable. Upon the conclusion of HECM counseling, the homeowner will be able to make an independent, well informed determination of whether or not the product will fulfill their needs.
California homeowners who meet the eligibility criteria 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 Standards When Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and have sizeable equity
Occupy your home as a primary residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the applicant
No repayment provided the home is the primary 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 homeowner
HUD-approved condominiums
Manufactured houses on property
Meet FHA property standards and flood requirements
How a reverse mortgage loans} Program Works For California Homeowners
Home owners 62 and older who have repaid their home loans or have only small home loan amounts remaining, and are currently residing in the property are eligible to take part in HUD’s reverse mortgage loan.
The loan permits homeowners 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 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 dependent on Financial institution.
In contrast to regular home equity loans, a HUD reverse mortgage doesn’t require repayment providing the property is the borrower’s principal residence. Mortgage lenders regain their principal, plus interest, when the property is sold. The rest of the value of the property goes to the homeowner or to her or his survivors. You can’t ever owe greater than your property’s appraised value.
If the sales funds are insufficient to repay the total due, HUD pays off the financial institution the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount a homeowner can borrow is determined by their age, the current interest rate, other loan fees and the appraisal of their property or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your house is, the older you are, the lower the interest, the more you can borrow.
There aren’t any asset or cash flow limits on homeowners receiving 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 will be 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which may be borrowed plus a .5% annual premium.