Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are helping older home owners in California obtain additional personal financial stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home owners age Sixty two and older to convert the home equity inside their property to a monthly stream of additional cash flow and/or a credit line to be paid back after they no longer live in the property.
The loan, typically referred to as HECM, is funded by a loan company like a mortgage lender, traditional bank, credit union or savings and loan association. To help the home owner in making a knowledgeable determination of whether the program fulfills their requirements, they’re required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Del Paso Heights, Walerga, North Highlands, Robla, Hagginwood
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to receiving a HECM and specifications for the mortgage loan becoming due and payable. After the conclusion 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 homeowners who meet the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution 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 property as well as have sizeable home equity
Live in 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 homeowner
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the homeowner
No repayment provided the house is the primary residence.
Mortgage Fees may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condominiums
Manufactured homes on land
Meet FHA property specifications and flood requirements
How the reverse mortgage lender in California} Program Works For California Homeowners
Home-owners 62 and older that have paid back their mortgages or have only small home loan balances remaining, and are currently residing in the property meet the criteria to take part in HUD’s reverse mortgage loan.
The loan allows property owners 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 situations change can restructure their payment options for a nominal fee of $20. Fees may vary based upon Lender.
Unlike normal home equity loans, a HUD reverse mortgage does not require repayment so long as the property is the borrower’s principal residence. Mortgage companies recover their principal, plus interest, once the property is sold. The rest of the value of the property would go to the homeowner or to his / her heirs. You can never owe above your property’s appraised value.
If the sales proceeds are not sufficient to cover the total amount due, HUD pays off the lender the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner may borrow is dependent upon their age, the current interest rate, other loan fees and the appraised value of their property or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your property is, the older you are, the lower the interest, the more you could borrow.
There are no asset or income restrictions on borrowers receiving 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 property is determined by an appraisal. Nonetheless, the amount that may 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 property owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that may be borrowed plus a .5% annual premium.