Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are assisting older residents in California gain additional financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior home-owners age Sixty two and older to transform the home equity in their house to a monthly stream of additional cashflow and/or a line of credit to be paid back after they no longer live in the house.
The home loan, often called HECM, is funded from a lender such as a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making an informed decision of if this program suits their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
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HECM counselors will talk about program qualification conditions, financial consequences and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. Upon the completion of HECM counseling, the homeowner should be able to make an independent, well informed decision of whether this product will satisfy their needs.
California homeowners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lending institution like a bank, loan company, or savings and loan association.
Borrower Requirements In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home as well as have sizeable home equity
Reside in your house as a primary residence
Taking part in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the applicant
No repayment provided the property is the primary residence.
Loan Costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit lived in by the homeowner
HUD-approved condos
Manufactured homes on land
Meet FHA property specifications and flood requirements
How the local reverse mortgage experts} Program Works For California Homeowners
Homeowners 62 and older which have paid off their mortgage loans or have only small home loan balances outstanding, and are also presently living in the house meet the requirements 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 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees could differ based upon Financial institution.
In contrast to regular home equity loans, a HUD reverse mortgage does not require repayment providing the house is the borrower’s principal residence. Loan providers regain their principal, plus interest, when the house is sold. The remainder of the value of the house goes to the homeowner or to his or her survivors. You’re never going to owe in excess of your house’s appraised value.
If the sales proceeds are not sufficient to cover the total amount owed, HUD will pay the financial institution the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. This is the great thing about the HUD™ FHA guarantee.
The total amount a homeowner can borrow will depend on what their age is, current interest rates, other loan fees and the appraisal vlaue of their house or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your home is, the older that you are, the lower the interest, the more you could borrow.
There are not any asset or income limits on homeowners acquiring HUD’s reverse home loan.
There are no limitations on the value of properties qualifying for a HUD reverse mortgage. The value of the home is determined by an appraisal. However, the amount which can 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 receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that may be borrowed plus a .5% annual premium.