Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are aiding elderly home owners in California attain additional personal financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to transform the equity in their house into a monthly flow of additional cash flow and/or a line of credit to be repaid once they no longer live in the house.
The mortgage, often called HECM, is funded by a lending institution for example a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a well informed determination of if the program meets their requirements, they’re required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Gardenland, Swanston, Elvas, Hagginwood, Ben Ali
HECM counselors will talk about program qualification requirements, financial implications and alternatives to obtaining a HECM and specifications for the house loan becoming due and payable. After the conclusion of HECM counseling, the home owner should be able to make an independent, educated determination of whether the product will satisfy 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 Requirements When Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and also have substantial equity
Occupy your home as a principal residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications are required of the homeowner
No repayment provided that the home is the principal 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 condo properties
Manufactured homes on property
Meet FHA property standards and flood requirements
How a local reverse mortgage specialist} Program Works For California Homeowners
Property owners 62 and older that have paid back their mortgage loans or have only small loan balances outstanding, and are also presently residing in the house meet the criteria to take part in HUD’s reverse mortgage program.
The loan enables home owners to borrow on the equity in their homes. 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 line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment selections for a nominal fee of $20. Fees may vary dependent on Lender.
Contrary to regular home equity loans, a HUD reverse mortgage does not require repayment provided the house is the borrower’s principal residence. Financial institutions recover their principal, plus interest, once the house is sold. The remaining value of the house would go to the homeowner or to their survivors. You’re never going to owe in excess of your house’s appraisal value.
If the sales proceeds are not enough to cover the total payable, HUD pays the lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to provide this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount a homeowner may borrow is determined by their age, current interest rates, other loan charges and the appraisal vlaue of their house or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your house is, the older you are, the lower the rate, the more you’ll be able to borrow.
There aren’t any asset or income limits on homeowners acquiring HUD’s reverse loan.
There are no restrictions on the value of homes being qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, the total amount which can 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 which may be borrowed plus a .5 percent annual premium.