Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are assisting older residents in California attain better economical security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior home owners age 62 and older to convert the home equity in their home into a monthly stream of extra cashflow and/or a line of credit to be paid back after they no longer occupy the home.
The mortgage, also known as HECM, is funded from a lending institution for example a mortgage lender, traditional bank, credit union or savings and loan association. To assist the homeowner in making an educated decision of whether this program suits their needs, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Dillard, Wilton, Sheldon, Hicksville, Coffing
HECM counselors will talk about program qualification requirements, financial consequences and alternatives to obtaining a HECM and specifications for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the homeowner will be able to make an independent, well informed decision of whether the product will fulfill their needs.
California home owners who satisfy the eligibility criteria can complete a reverse mortgage application by speaking to a FHA-approved lending institution like a bank, loan company, or savings and loan association.
Borrower Requirements For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property as well as have sizeable home equity
Reside in your property as a principal residence
Participation in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications are required of the homeowner
No repayment as long as the property is the principal residence.
Fee may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condos
Manufactured homes on land
Meet FHA property requirements and flood requirements
How a local reverse mortgage experts} Program Works For California Homeowners
Property owners 62 and older which have paid off their mortgage loans or have only small mortgage amounts outstanding, and are currently living in the home meet the criteria to take part in HUD’s reverse mortgage loan.
The loan permits homeowners to borrow from the equity in their houses. Homeowners can choose 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 Lender.
In contrast to ordinary home equity loans, a HUD reverse mortgage does not need repayment provided the home is the borrower’s principal residence. Financial institutions recover their principal, plus interest, once the home is sold. The remaining value of the home goes to the homeowner or to her or his survivors. You can’t ever owe in excess of your home’s appraised value.
If the sales funds are not enough to repay the total due, HUD will pay the lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. That is the great thing about the HUD™ FHA guarantee.
The total amount a homeowner could borrow depends upon how old they are, the current interest rates, other loan fees and the appraisal vlaue of their home or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your house is, the older you are, the lower the rate, the more you could borrow.
There are no asset or cash flow restrictions on borrowers receiving HUD’s reverse house loan.
There are no limits on the value of houses qualifying for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nevertheless, the total that could 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 homeowners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that may be borrowed plus a .5% annual premium.