Reverse mortgages (generally known as Home Equity Conversion Mortgages, abbreviated to HECM) are aiding elderly homeowners in California attain better economical security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior homeowners age 62 and older to transform the home equity in their property into a monthly stream of additional cashflow and/or a line of credit to be paid back after they cease to occupy the property.
The home loan, often called HECM, is funded by a loan company like a mortgage lender, bank, credit union or savings and loan association. To help the home-owner in making an educated decision of whether this program fulfills their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Rosemont, Mayhew, Manlove, La Riviera, Mather Field
HECM counselors will talk about program eligibility conditions, financial implications and alternatives to obtaining a HECM and provisions for the home loan becoming due and payable. After the conclusion of HECM counseling, the home-owner will be able to make an independent, informed decision of whether or not this product will satisfy their requirements.
California home-owners who fulfill the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association.
Borrower Criteria When Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home and have sizeable home equity
Live in your property as a primary residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the borrower
No repayment provided that the house is the primary residence.
Mortgage Fees may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit lived in by the homeowner
HUD-approved condominiums
Manufactured homes on property
Meet FHA property standards and flood requirements
How the jumbo reverse mortgage in California} Program Works For California Homeowners
Homeowners 62 and older which have paid back their mortgages or have only small mortgage balances remaining, and are presently residing in the property are eligible to take part in HUD’s reverse mortgage loan.
The loan enables home-owners to borrow from the equity in their houses. 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 conditions change can restructure their payment options for a nominal fee of $20. Fees could differ depending on Loan company.
As opposed to ordinary home equity loans, a HUD reverse mortgage does not require repayment so long as 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 their heirs. You’re never going to owe more than your property’s appraised value.
If the sales proceeds are insufficient to repay the total amount due, HUD pays off the mortgage lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The total amount a homeowner could borrow is determined by what their age is, current interest rates, other loan fees and the appraised value 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 interest, the more you’ll be able to borrow.
There are not any asset or income restrictions on borrowers acquiring HUD’s reverse house loan.
Additionally, there are no limits on the value of houses getting qualified for a HUD reverse mortgage. The value of the house will be determined by an appraisal. However, the 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that may be borrowed along with a .5% annual premium.