Reverse mortgages (known as Home Equity Conversion Mortgages, shortened to HECM) are helping elderly people in California achieve better economical stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior property owners age 62 and older to transform the equity inside their home into a monthly stream of extra cash flow and/or a line of credit to be paid back when they no longer inhabit the home.
The mortgage loan, commonly known as HECM, is funded from a mortgage company for example a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making an informed determination of if this program meets their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Citrus, Rancho Cordova, Gold River, Mather Field, Fair Oaks
HECM counselors will talk about program qualification requirements, financial consequences and alternatives to receiving a HECM and provisions for the mortgage becoming due and payable. After the completion of HECM counseling, the home owner should be able to make an independent, educated determination of whether this product will meet their requirements.
California home owners who fulfill the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Standards When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have substantial equity
Reside in your home 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 homeowner
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the homeowner
No repayment provided that the home is the primary residence.
Loan Costs 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 condos
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How the reverse mortgage home loan} Program Works For California Homeowners
Homeowners 62 and older that have paid back their mortgages or have only small home loan balances outstanding, and are currently residing in the home meet the requirements to participate in HUD’s reverse mortgage program.
The loan makes it possible for homeowners to borrow against the equity in their properties. 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 line of credit with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly installments for a fixed period of months selected by the borrower.
Homeowners whose circumstances change can restructure their payment options for a nominal fee of $20. Fees could differ dependant upon Loan company.
Contrary to regular home equity loans, a HUD reverse mortgage doesn’t require repayment providing the home is the borrower’s primary residence. Mortgage companies recover their principal, plus interest, whenever the home is sold. The remainder of the value of the home goes to the homeowner or to her or his survivors. You can never owe in excess of your home’s appraised value.
If the sales funds are insufficient to repay the total payable, HUD pays the mortgage lender the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount a homeowner could borrow depends on their age, the current interest rates, other loan costs and the appraisal of their home or FHA ‘s mortgage limits with their area, whichever is less. Normally, the more valuable your property is, the older you are, the lower the interest, the more you are able to borrow.
There are not any asset or income limits on borrowers receiving HUD’s reverse loan.
Additionally, there are no limits on the value of properties getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the total 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 homeowners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount which can be borrowed as well as a .5% annual premium.