Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are serving to older homeowners in California reach better personal financial security and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior home owners age Sixty two and older to convert the equity in their house into a monthly flow of additional cash flow and/or a credit line to be repaid when they cease to live in the house.
The mortgage loan, also known as HECM, is funded by 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 this program fulfills their requirements, they’re required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Broderick, Peethill, Casa Mobile Home Park, West Sacramento, Westwind Estates
HECM counselors will talk about program eligibility requirements, financial consequences and alternatives to obtaining a HECM and specifications for the mortgage 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 or not the product will meet their requirements.
California homeowners who meet the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lending institution like 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 property and also have considerable equity
Reside in your house as a primary residence
Participation in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the borrower
No repayment providing the property is the primary residence.
Fee may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit lived in by the borrower
HUD-approved condo properties
Manufactured homes on land
Meet FHA property specifications and flood requirements
How a reverse mortgage experts} Program Works For California Homeowners
Home-owners 62 and older which have repaid their mortgages or have only small home loan amounts remaining, and are currently living in the house are eligible to participate in HUD’s reverse mortgage program.
The loan makes it possible for home owners to borrow against 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 credit line with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment options for a nominal fee of $20. Fees could differ dependent on Loan provider.
Unlike normal home equity loans, a HUD reverse mortgage does not require repayment provided that the house is the borrower’s principal residence. Lenders regain their principal, plus interest, once the house is sold. The rest of the value of the house goes to the homeowner or to her or his survivors. You’re never going to owe above your house’s appraised value.
If the sales funds are not enough to cover the balance payable, HUD pays off the lending company the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The total a homeowner could borrow is determined by their age, the current interest rates, other loan fees and the appraisal vlaue of their house or FHA ‘s mortgage limits for their area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you are able to borrow.
There isn’t any asset or cash flow limitations on borrowers acquiring HUD’s reverse mortgage.
Additionally, there are no limitations on the value of houses being qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the total that may be borrowed comes 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 get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that could be borrowed and then a .5% annual premium.