Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly people in California gain better economical stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior home owners age 62 and older to transform the equity inside their property to a monthly flow of additional cashflow and/or a credit line to be paid back when they do not inhabit the property.
The mortgage, typically referred to as HECM, is funded by a lender such as a mortgage lender, traditional bank, credit union or savings and loan association. To help the homeowner in making an educated determination of whether the program suits their requirements, they are required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Fruitridge Manor, Oak Park, Parkway-South Sacramento, Cordova, Brighton
HECM counselors will talk about program eligibility requirements, financial consequences and alternatives to obtaining a HECM and specifications for the mortgage becoming due and payable. After the conclusion of HECM counseling, the homeowner must be able to make an independent, well informed determination of whether or not this product will satisfy their requirements.
California home owners who satisfy the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lender such as a bank, loan company, or savings and loan association.
Borrower Standards When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home as well as have significant equity
Reside in your house as a primary 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 requirements will be required of the homeowner
No repayment provided the property is the primary residence.
Loan Costs may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit lived in by the borrower
HUD-approved condominiums
Manufactured homes on land
Meet FHA property standards and flood requirements
How a reverse mortgage company} Program Works For California Homeowners
Home-owners 62 and older who have paid in full their house loans or have only small loan amounts remaining, and are also currently residing in the property meet the requirements to take part in HUD’s reverse mortgage program.
The loan allows homeowners to borrow from the equity in their houses. Homeowners can choose 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 situations change can restructure their payment options for a nominal fee of $20. Fees could differ depending on Loan provider.
As opposed to standard home equity loans, a HUD reverse mortgage does not need repayment so long as the property is the borrower’s principal residence. Lenders recover their principal, plus interest, when 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 funds are inadequate to pay the total owed, HUD pays off the financial institution the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner can borrow is dependent on how old they are, current interest rate, other loan costs and the appraisal of their property or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your property is, the older that you are, the lower the interest, the more you’re able to borrow.
There isn’t any asset or income limitations on homeowners receiving HUD’s reverse loan.
There are no restrictions on the value of houses being qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the total amount which can be borrowed is derived 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 that may be borrowed plus a .5% annual premium.