Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly people in California reach an increased personal financial security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior property owners age 62 and older to transform the home equity in their house into a monthly stream of extra cashflow and/or a line of credit to be repaid once they cease to inhabit the house.
The home loan, typically referred to as HECM, is funded from a loan company like a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making a well informed determination of whether the program meets their requirements, they are required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Hagginwood, Del Paso Heights, Town and Country Village, Swanston, North Sacramento
HECM counselors will talk about program eligibility requirements, financial implications 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, educated determination of whether or not the product will fulfill their requirements.
California home-owners who fulfill the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lending institution such as a bank, loan company, or savings and loan association.
Borrower Criteria To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property and also have substantial home equity
Live in your house as a primary residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest applicant
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications are required of the borrower
No repayment so long as the house is the primary residence.
Costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condos
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How a local reverse mortgage experts} Program Works For California Homeowners
Property owners 62 and older that have paid in full their home loans or have only small home loan amounts remaining, and are also currently living in the house are eligible to participate in HUD’s reverse mortgage loan.
The loan permits home owners to borrow against the equity in their houses. Homeowners can choose 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees could differ dependant upon Financial institution.
In contrast to regular home equity loans, a HUD reverse mortgage doesn’t require repayment provided the house is the borrower’s principal residence. Lenders regain their principal, plus interest, once the house is sold. The remaining value of the house goes to the homeowner or to his or her heirs. You can’t ever owe in excess of your house’s appraisal value.
If the sales funds are inadequate to repay the total amount payable, HUD will pay the lending company the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner can borrow depends upon what their age is, current interest rates, other loan fees and the appraisal vlaue of their house or FHA ‘s mortgage limits with their area, whichever is less. Generally, the more valuable your home is, the older that you are, the lower the interest rate, the more you’re able to borrow.
There are not any asset or income restrictions on borrowers acquiring HUD’s reverse loan.
There are no limitations on the value of houses qualifying for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the total that could 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 that is 2% of the maximum claim amount which can be borrowed and then a .5% annual premium.