Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are serving to older home owners in California achieve greater economical stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior homeowners age 62 and older to transform the equity inside their house to a monthly flow of extra cash flow and/or a credit line to be paid back when they no longer live in the house.
The home loan, also known as HECM, is funded from a mortgage company like a mortgage lender, bank, credit union or savings and loan association. To help the home-owner in making a knowledgeable decision of if the program meets their requirements, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Laguna West-Lakeside, Hood Junction, Point Pleasant, Laguna West, Laguna
HECM counselors will discuss program qualification requirements, financial implications and alternatives to getting a HECM and provisions for the mortgage loan becoming due and payable. After the completion of HECM counseling, the home-owner will be able to make an independent, informed decision of whether the product will meet their requirements.
California home owners who meet the eligibility criteria 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 Specifications To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and have significant equity
Live in your property as a primary residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest applicant
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the applicant
No repayment as long as the property is the primary residence.
Fee may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condominiums
Manufactured homes on property
Meet FHA property specifications and flood requirements
How the reverse mortgage loans} Program Works For California Homeowners
Homeowners 62 and older who have paid in full their mortgage loans or have only small home loan balances remaining, and are also currently residing in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan makes it possible for 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees could differ dependant upon Lender.
In contrast to standard home equity loans, a HUD reverse mortgage does not require repayment provided the house is the borrower’s primary residence. Mortgage companies regain their principal, plus interest, whenever the house is sold. The rest of the value of the house goes to the homeowner or to his or her survivors. You can’t ever owe in excess of your house’s appraised value.
If the sales funds are not enough to repay the total 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 beauty of the HUD™ FHA guarantee.
The amount a homeowner can borrow is dependent upon what their age is, the current interest rate, other loan fees and the appraised value of their house or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your house is, the older that you are, the lower the interest rate, the more you’re able to borrow.
There are no asset or cash flow limitations on borrowers obtaining HUD’s reverse mortgage.
There’s also no restrictions on the value of properties qualifying for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, 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 home owners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which can be borrowed and then a .5 percent annual premium.