Reverse mortgages (often called Home Equity Conversion Mortgages, shortened to HECM) are helping elderly residents in California attain greater monetary security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior homeowners age Sixty two and older to convert the home equity in their home into a monthly flow of additional cashflow and/or a line of credit to be repaid when they no longer inhabit the home.
The mortgage loan, also known as HECM, is funded from a lender such as a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making an educated determination of if this program satisfies their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Parkway-South Sacramento, Parkway, Pollock, Fruitridge Pocket, Fruitridge Manor
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to obtaining a HECM and provisions for the home loan becoming due and payable. Upon the completion of HECM counseling, the home owner must be able to make an independent, informed determination of whether or not the product will fulfill their requirements.
California home owners who fulfill the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lending institution like 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 significant home equity
Reside in your property as a primary residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications will be required of the applicant
No repayment provided that the property is the primary residence.
Loan Costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the homeowner
HUD-approved condo properties
Manufactured houses on land
Meet FHA property specifications and flood requirements
How a reverse mortgage loan in California} Program Works For California Homeowners
Home-owners 62 and older that have repaid their mortgages or have only small home loan amounts outstanding, and are currently residing in the home meet the criteria to take part in HUD’s reverse mortgage program.
The loan permits homeowners to borrow on the equity in their houses. Homeowners can select 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 circumstances change can restructure their payment selections for a nominal fee of $20. Fees can vary depending on Lender.
In contrast to normal home equity loans, a HUD reverse mortgage does not require repayment providing the home is the borrower’s principal residence. Loan companies regain their principal, plus interest, once the home is sold. The remaining value of the home would go to the homeowner or to her or his heirs. You’re never going to owe above your home’s appraisal value.
If the sales proceeds are not sufficient to pay the balance owed, HUD pays the lender the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow will depend on their age, current interest rates, other loan costs and the appraisal of their home or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your house is, the older you are, the lower the interest, the more you’ll be able to borrow.
There isn’t any asset or income limitations on borrowers acquiring HUD’s reverse house loan.
There are also no restrictions on the value of houses qualifying for a HUD reverse mortgage. The value of the house is determined by an appraisal. However, the total amount that could 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 homeowners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which can be borrowed along with a .5% annual premium.