Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly home owners in California obtain greater monetary security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior homeowners age 62 and older to transform the home equity inside their property to a monthly stream of additional cash flow and/or a line of credit to be paid back when they do not inhabit the property.
The mortgage loan, also known as HECM, is funded from a mortgage company for example a mortgage lender, bank, credit union or savings and loan association. To support the homeowner in making a well informed determination of if the program fulfills their requirements, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Oak Park, Sacramento, West Sacramento Trailer Park, Fruitridge Pocket, Peethill
HECM counselors will discuss program eligibility conditions, financial consequences and alternatives to getting a HECM and provisions for the home loan becoming due and payable. After the completion of HECM counseling, the homeowner will be able to make an independent, informed determination of whether or not the product will fulfill their requirements.
California homeowners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lending institution such as a bank, mortgage 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 also have substantial home equity
Reside in your property as a principal residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements will be required of the homeowner
No repayment providing the house is the principal residence.
Fee 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 condos
Manufactured homes on land
Meet FHA property conditions and flood requirements
How the jumbo reverse mortgage} Program Works For California Homeowners
Property owners 62 and older that have paid back their mortgage loans or have only small loan amounts outstanding, and are also presently living in the property are eligible to participate in HUD’s reverse mortgage loan.
The loan allows homeowners to borrow on the equity in their homes. 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 line of credit with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly installments 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 may vary dependent on Loan company.
Unlike standard home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the property is the borrower’s primary residence. Financial institutions recover their principal, plus interest, whenever the property is sold. The remaining value of the property goes to the homeowner or to his or her survivors. You can’t ever owe in excess of your property’s appraisal value.
If the sales proceeds are insufficient to cover the amount due, HUD will pay the financial institution the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The total a homeowner could borrow depends on their age, current interest rates, other loan charges 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 that you are, the lower the interest, the more you’ll be able to borrow.
There isn’t any asset or income limits on borrowers acquiring HUD’s reverse loan.
There are also no restrictions on the value of homes qualifying for a HUD reverse mortgage. The value of the property will be determined by an appraisal. Nonetheless, the total 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 homeowners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that may be borrowed and then a .5% annual premium.