Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are aiding older home owners in California obtain an increased economical security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age 62 and older to convert the home equity in their property into a monthly flow of extra cashflow and/or a line of credit to be repaid once they no longer inhabit the property.
The mortgage, often called HECM, is funded from a mortgage company for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the home-owner in making a well informed determination of whether the program satisfies their requirements, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Rancho Cordova, Arden-Arcade, Soudan, Arcade, Citrus
HECM counselors will discuss program eligibility requirements, financial implications and alternatives to receiving a HECM and specifications for the mortgage loan becoming due and payable. Upon the conclusion of HECM counseling, the home-owner should be able to make an independent, well informed determination of whether or not the product will meet their requirements.
California homeowners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Specifications When Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home as well as have significant home equity
Occupy your home 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 homeowner
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the homeowner
No repayment providing the house is the principal residence.
Mortgage Fees may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condos
Manufactured houses on property
Meet FHA property guidelines and flood requirements
How the Home Equity Conversion Mortgage in California} Program Works For California Homeowners
Home-owners 62 and older who have paid back their house loans or have only small loan balances outstanding, and are also currently residing in the property meet the criteria to participate in HUD’s reverse mortgage loan.
The loan enables home owners to borrow from the equity in their homes. 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 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 situations change can restructure their payment options for a nominal fee of $20. Fees could differ dependant upon Loan company.
In contrast to normal home equity loans, a HUD reverse mortgage does not need repayment providing the property is the borrower’s principal residence. Lenders recover their principal, plus interest, once the property is sold. The remainder of the value of the property goes to the homeowner or to his / her heirs. You’re never going to owe more than your property’s appraised value.
If the sales funds are inadequate to pay the total owed, HUD pays the mortgage lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to provide this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow is dependent upon how old they are, the current interest rate, other loan charges and the appraisal of their property 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 are able to borrow.
There are not any asset or cash flow limits on homeowners receiving HUD’s reverse home loan.
In addition there are no limitations on the value of homes qualifying for a HUD reverse mortgage. The value of the property will be determined by an appraisal. Nevertheless, 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount that may be borrowed as well as a .5% annual premium.