Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly people in California obtain better monetary security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior homeowners age Sixty two and older to convert the equity in their property to a monthly stream of additional cash flow and/or a credit line to be paid back after they do not occupy the property.
The loan, commonly known as HECM, is funded by a lending institution for example a mortgage lender, bank, credit union or savings and loan association. To help the homeowner in making a well informed decision of whether the program suits their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Counsman, Sankey, Elverta, Bombay, Rio Linda
HECM counselors will discuss program qualification requirements, financial consequences and alternatives to getting a HECM and provisions for the mortgage loan becoming due and payable. After the completion of HECM counseling, the homeowner will be able to make an independent, informed decision of whether or not this product will meet their requirements.
California homeowners who fulfill the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lending institution such as a bank, loan company, or savings and loan association.
Borrower Requirements In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and have sizeable equity
Reside in your property as a primary residence
Participation in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements are required of the homeowner
No repayment provided that the home is the primary residence.
Mortgage Fees may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condo properties
Manufactured homes on land
Meet FHA property guidelines and flood requirements
How the reverse mortgage loans} Program Works For California Homeowners
Homeowners 62 and older who have paid back their house loans or have only small home loan balances remaining, and are also presently living in the property are eligible to participate in HUD’s reverse mortgage program.
The loan makes it possible for home-owners to borrow from 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 circumstances change can restructure their payment options for a nominal fee of $20. Fees can vary dependent on Loan company.
As opposed to regular home equity loans, a HUD reverse mortgage does not need repayment providing the property is the borrower’s primary residence. Loan companies regain their principal, plus interest, once the property is sold. The remainder of the value of the property would go to the homeowner or to his / her survivors. You can’t ever owe in excess of your property’s appraised value.
If the sales funds are not sufficient to repay the total owed, 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 provide this coverage. That is the great thing about the HUD™ FHA guarantee.
The total a homeowner could borrow depends upon their age, current interest rate, other loan costs and the appraised value of their property or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your house is, the older you are, the lower the rate, the more you can borrow.
There are not any asset or income limits on borrowers acquiring HUD’s reverse house loan.
There are also no restrictions on the value of houses qualifying for a HUD reverse mortgage. The value of the house will be determined by an appraisal. However, the total 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 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 percent annual premium.