Reverse mortgages (also known as Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly home owners in California achieve greater financial stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior homeowners age 62 and older to transform the home equity inside their property to a monthly flow of additional cashflow and/or a credit line to be paid back after they do not live in the property.
The mortgage loan, typically referred to 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 a well informed decision of whether this program satisfies their needs, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Arcade, Ben Ali, Arden-Arcade, Del Paso Heights, Hagginwood
HECM counselors will talk about program eligibility conditions, financial implications and alternatives to obtaining a HECM and provisions for the house loan becoming due and payable. Upon the conclusion of HECM counseling, the home-owner must be able to make an independent, well informed decision of whether or not the product will meet their needs.
California home owners who fulfill the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender such as a bank, loan company, or savings and loan association.
Borrower Standards To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home as well as have considerable home equity
Live in your property as a principal residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the borrower
No repayment provided the property is the principal residence.
Closing costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the homeowner
HUD-approved condo properties
Manufactured houses on property
Meet FHA property standards and flood requirements
How the local reverse mortgage experts} Program Works For California Homeowners
Homeowners 62 and older that have paid back their mortgage loans or have only small loan balances remaining, and are also presently living in the property meet the requirements to take part in HUD’s reverse mortgage loan.
The loan allows home owners to borrow on the equity in their properties. Homeowners can select 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 credit line with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of credit line 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 could differ depending on Lender.
Contrary to ordinary home equity loans, a HUD reverse mortgage does not need repayment as long as the property is the borrower’s primary residence. Mortgage companies regain their principal, plus interest, whenever the property is sold. The rest of the value of the property goes to the homeowner or to his / her heirs. You can’t ever owe above your property’s appraisal value.
If the sales proceeds are inadequate to repay the total payable, HUD will pay the lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The total a homeowner could borrow will depend on how old they are, the current interest rates, other loan charges and the appraisal vlaue of their property 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 rate, the more you’ll be able to borrow.
There are not any asset or income limitations on borrowers receiving HUD’s reverse house loan.
There’s also no limitations on the value of properties getting qualified for a HUD reverse mortgage. The value of the house will be determined by an appraisal. Nonetheless, the total amount that may be borrowed is derived from the lower 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 which is 2% of the maximum claim amount which can be borrowed plus a .5% annual premium.