Reverse mortgages (also known as Home Equity Conversion Mortgages, abbreviated to HECM) are aiding older residents in California attain better financial stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior property owners age 62 and older to transform the equity inside their house into a monthly flow of extra cash flow and/or a credit line to be paid back when they do not live in the house.
The loan, commonly known as HECM, is funded by a mortgage company for example a mortgage lender, bank, credit union or savings and loan association. To support the home owner in making an educated decision of if this program satisfies their needs, they’re required to get consumer education and counseling from a HUD-approved HECM counselor.
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HECM counselors will discuss program eligibility conditions, financial implications and alternatives to receiving a HECM and specifications for the mortgage loan becoming due and payable. After the completion of HECM counseling, the home owner will be able to make an independent, informed decision of whether or not this product will satisfy their needs.
California home-owners who satisfy the eligibility requirements 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 Requirements In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and have sizeable equity
Reside in your property as a primary residence
Participation in a consumer information session given by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the borrower
No repayment provided that the home is the primary residence.
Closing costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condos
Manufactured homes on land
Meet FHA property conditions and flood requirements
How a local reverse mortgage specialist in California} Program Works For California Homeowners
Home owners 62 and older which have paid back their house loans or have only small home loan amounts outstanding, and are also currently living in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan allows homeowners to borrow against 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 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 conditions change can restructure their payment options for a nominal fee of $20. Fees could differ depending on Loan provider.
As opposed to ordinary home equity loans, a HUD reverse mortgage does not need repayment provided that the house is the borrower’s primary residence. Lenders recover their principal, plus interest, whenever the house is sold. The rest of the value of the house goes to the homeowner or to his or her survivors. You’re never going to owe greater than your house’s appraisal value.
If the sales proceeds are insufficient to cover the amount owed, HUD pays off the lending company the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner can borrow is determined by how old they are, current interest rates, other loan fees and the appraised value of their house or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your home is, the older that you are, the lower the interest, the more you are able to borrow.
There are not any asset or income limits on borrowers receiving HUD’s reverse home loan.
There are no limits on the value of houses qualifying for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nevertheless, the amount 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 homeowners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount which can be borrowed along with a .5 percent annual premium.