Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are aiding older people in California reach greater economical security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior homeowners age Sixty two and older to transform the home equity in their property to a monthly stream of additional cash flow and/or a line of credit to be paid back when they do not occupy the property.
The home loan, also known as HECM, is funded from a lender for example a mortgage lender, bank, credit union or savings and loan association. To support the homeowner in making a well informed decision of whether the program fulfills their needs, they’re required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Kiesel, Conaway, Vin, Beatrice, King Farms
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the homeowner will be able to make an independent, informed decision of whether the product will fulfill their needs.
California home-owners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Specifications For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home as well as have substantial home equity
Reside in your home as a primary residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the homeowner
No repayment provided that the property is the primary residence.
Loan Costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condo properties
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How a FHA reverse mortgage in California} Program Works For California Homeowners
Home-owners 62 and older that have repaid their mortgage loans or have only small home loan balances remaining, and are also currently residing in the property are eligible to take part in HUD’s reverse mortgage program.
The loan permits home-owners to borrow against the equity in their houses. Homeowners can choose 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 situations change can restructure their payment options for a nominal fee of $20. Fees could differ depending on Financial institution.
Contrary to standard home equity loans, a HUD reverse mortgage does not need repayment provided that the property is the borrower’s principal residence. Mortgage companies regain their principal, plus interest, whenever the property is sold. The remaining value of the property goes to the homeowner or to their survivors. You can’t ever owe in excess of your property’s appraised value.
If the sales funds are inadequate to cover the total owed, HUD will pay the lending company the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner could borrow depends upon how old they are, the current interest rate, other loan charges and the appraisal vlaue of their property or FHA ‘s mortgage limits for their area, whichever is less. Generally, the more valuable your property is, the older you are, the lower the interest rate, the more you could borrow.
There are not any asset or income limits on borrowers acquiring HUD’s reverse house loan.
There’s also no limitations on the value of houses qualifying for a HUD reverse mortgage. The value of the property will be determined by an appraisal. However, the total which can 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 home-owners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that could be borrowed along with a .5 percent annual premium.