Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are assisting elderly people in California attain greater 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 inside their home into a monthly stream of extra cashflow and/or a credit line to be repaid after they no longer occupy the home.
The home loan, also known as HECM, is funded by a loan company like a mortgage lender, traditional bank, credit union or savings and loan association. To assist the home-owner in making an informed decision of if this program meets their requirements, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Leisureville Mobile Home Park, Woodland, Royal Palms Mobile Estates, Idle Wheel Mobile Estates, Browns Corner
HECM counselors will discuss program eligibility requirements, financial implications and alternatives to obtaining a HECM and provisions for the house loan becoming due and payable. After the conclusion of HECM counseling, the home-owner must be able to make an independent, educated decision of whether or not the product will meet their requirements.
California homeowners who satisfy the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Criteria To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have substantial equity
Reside in your property as a primary residence
Taking part 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 appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements are required of the borrower
No repayment provided the property 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 houses on property
Meet FHA property requirements and flood requirements
How the reverse mortgage lender} Program Works For California Homeowners
Home-owners 62 and older who have paid back their mortgages or have only small mortgage balances remaining, and are presently living in the home meet the criteria to take part in HUD’s reverse mortgage program.
The loan allows homeowners to borrow on the equity in their houses. Homeowners can choose 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 could differ depending on Loan provider.
In contrast to normal home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the home is the borrower’s primary residence. Lenders recover their principal, plus interest, when the home is sold. The remaining value of the home would go to the homeowner or to her or his heirs. You can’t ever owe more than your home’s appraisal value.
If the sales proceeds are not enough to pay the balance payable, HUD pays off the financial institution the amount 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 is dependent on their age, current interest rates, other loan charges and the appraised value of their home or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your house is, the older you are, the lower the rate, the more you can borrow.
There are not any asset or cash flow limits on borrowers acquiring HUD’s reverse house loan.
There’s also no limits on the value of houses getting qualified for a HUD reverse mortgage. The value of the house will be determined by an appraisal. Nevertheless, the amount that may 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which may be borrowed as well as a .5% annual premium.