Reverse mortgages (known as Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly home owners in California achieve an increased personal financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior home owners age 62 and older to transform the equity in their house to a monthly flow of extra cash flow and/or a credit line to be paid back once they no longer occupy the house.
The loan, commonly known as HECM, is funded from a lending institution for example a mortgage lender, bank, credit union or savings and loan association. To support the home owner in making an educated decision of whether the program suits their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Woodlands Mobile Home Park, Royal Palms Mobile Estates, Idle Wheel Mobile Estates, Woodland, Browns Corner
HECM counselors will discuss program eligibility requirements, financial consequences and alternatives to obtaining a HECM and specifications for the home loan becoming due and payable. After the completion of HECM counseling, the home owner must be able to make an independent, well informed decision of whether the product will meet their requirements.
California home owners who satisfy the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Criteria For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property as well as have significant equity
Reside in your property as a primary residence
Taking part in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the applicant
No repayment so long as the home is the primary residence.
Loan Costs may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit lived in by the homeowner
HUD-approved condos
Manufactured homes on property
Meet FHA property requirements and flood requirements
How a reverse mortgage} Program Works For California Homeowners
Home-owners 62 and older which have repaid their mortgages or have only small mortgage balances outstanding, and are presently residing in the house are eligible to participate in HUD’s reverse mortgage loan.
The loan allows home owners to borrow on the equity in their properties. 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 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 dependent on Lender.
In contrast to standard home equity loans, a HUD reverse mortgage doesn’t require repayment so long as the house is the borrower’s primary residence. Loan providers recover their principal, plus interest, when the house is sold. The remainder of the value of the house would go to the homeowner or to her or his survivors. You’re never going to owe above your house’s appraised value.
If the sales funds are insufficient to cover the amount due, HUD pays the financial institution the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. This is the great thing about the HUD™ FHA guarantee.
The total a homeowner can borrow depends upon how old they are, current interest rate, other loan fees and the appraisal vlaue of their house or FHA ‘s mortgage limits with their area, whichever is less. Normally, the more valuable your house is, the older that you are, the lower the rate, the more you could borrow.
There isn’t any asset or income limitations on borrowers receiving HUD’s reverse house loan.
There are no limits on the value of properties qualifying for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, the total that could be borrowed is derived from the lesser of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the home owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that could be borrowed plus a .5% annual premium.