Reverse mortgages (also known as Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly homeowners in California obtain greater economical stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior home-owners age 62 and older to transform the equity in their house into a monthly stream of extra cash flow and/or a credit line to be paid back after they do not inhabit the house.
The mortgage, commonly known as HECM, is funded from a mortgage company such as a mortgage lender, traditional bank, credit union or savings and loan association. To help the home owner in making a knowledgeable decision of whether the program fulfills their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Fallbrook, Elk Grove, Laguna, Vineyard, Coffing
HECM counselors will talk about program eligibility conditions, financial implications and alternatives to obtaining a HECM and provisions for the home loan becoming due and payable. After the completion of HECM counseling, the home owner should be able to make an independent, educated decision of whether 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 Standards To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property as well as have considerable equity
Occupy your property as a principal residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest applicant
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications will be required of the homeowner
No repayment so long as the house is the principal residence.
Loan Costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the homeowner
HUD-approved condo properties
Manufactured houses on property
Meet FHA property requirements and flood requirements
How a local reverse mortgage specialist in California} Program Works For California Homeowners
Property owners 62 and older who have paid back their house loans or have only small home loan amounts remaining, and are currently residing in the house meet the criteria to participate in HUD’s reverse mortgage loan.
The loan enables property owners to borrow against the equity in their houses. Homeowners can select 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 options for a nominal fee of $20. Fees could differ dependent on Loan company.
Unlike regular home equity loans, a HUD reverse mortgage does not require repayment provided that the house is the borrower’s principal residence. Loan companies recover their principal, plus interest, once the house is sold. The rest of the value of the house would go to the homeowner or to her or his survivors. You can never owe more than your house’s appraisal value.
If the sales funds are insufficient to cover the balance owed, 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 amount a homeowner may borrow depends upon their age, the current interest rates, other loan fees and the appraised value of their house or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your home is, the older you are, the lower the interest rate, the more you could borrow.
There isn’t any asset or income limits on borrowers receiving HUD’s reverse home loan.
There are no restrictions on the value of houses qualifying for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the amount which can 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 property owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which can be borrowed as well as a .5% annual premium.