Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly people in California obtain improved financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior home-owners age 62 and older to convert the home equity inside their house to a monthly stream of additional cash flow and/or a credit line to be repaid after they cease to occupy the house.
The mortgage loan, commonly known as HECM, is funded by a lender like a mortgage lender, traditional bank, credit union or savings and loan association. To support the home-owner in making an educated determination of whether the program meets their requirements, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Rio Linda, Bombay, Riego, Counsman, Robla
HECM counselors will discuss program qualification requirements, financial consequences and alternatives to getting a HECM and specifications for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the home-owner will be able to make an independent, informed determination of whether or not this product will satisfy their requirements.
California home owners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Standards In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property as well as have sizeable home equity
Occupy your home as a primary residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements are required of the borrower
No repayment provided the property is the primary residence.
Fee may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the homeowner
HUD-approved condominiums
Manufactured houses on property
Meet FHA property guidelines and flood requirements
How the reverse mortgage near me in California} Program Works For California Homeowners
Property owners 62 and older which have repaid their home loans or have only small loan amounts outstanding, and are also currently residing in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan enables homeowners to borrow on the equity in their houses. Homeowners can select 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 credit line with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly installments for a fixed period of months selected by the borrower.
Homeowners whose circumstances change can restructure their payment options for a nominal fee of $20. Fees may vary based upon Lender.
In contrast to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the house is the borrower’s principal residence. Financial institutions recover their principal, plus interest, when the house is sold. The rest of the value of the house goes to the homeowner or to their survivors. You can never owe in excess of your house’s appraisal value.
If the sales funds are not sufficient to pay the balance due, HUD pays off the mortgage lender the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage. That is the great thing about the HUD™ FHA guarantee.
The total amount a homeowner may borrow is dependent on how old they are, current interest rate, other loan costs and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your property is, the older that you are, the lower the interest, the more you could borrow.
There isn’t any asset or income limitations on borrowers receiving HUD’s reverse house loan.
There’s also no restrictions on the value of houses getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nevertheless, the amount that could be borrowed comes from the lower of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the homeowners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount which may be borrowed along with a .5% annual premium.