Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are serving to older homeowners in California achieve greater personal financial stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior home-owners age Sixty two and older to transform the home equity in their home to a monthly flow of additional cash flow and/or a credit line to be paid back once they do not inhabit the home.
The mortgage, commonly known as HECM, is funded from a lending institution like a mortgage lender, bank, credit union or savings and loan association. To help the home-owner in making a knowledgeable decision of if this program fulfills their requirements, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Del Paso, Rio Linda, Del Paso Heights, McClellan Park, Hagginwood
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. Upon the completion of HECM counseling, the home-owner must be able to make an independent, informed decision of whether the product will fulfill their requirements.
California home owners who meet the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association.
Borrower Criteria When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property as well as have substantial home equity
Live in your house as a primary residence
Taking part in a consumer information session given by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications are required of the borrower
No repayment so long as the property is the primary residence.
Closing costs 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 property
Meet FHA property specifications and flood requirements
How the local reverse mortgage} Program Works For California Homeowners
Homeowners 62 and older who have repaid their mortgages or have only small mortgage amounts remaining, and are currently residing in the home meet the criteria to participate in HUD’s reverse mortgage loan.
The loan permits home-owners to borrow on the equity in their houses. Homeowners can choose 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 credit line with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of credit line 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.
Unlike regular home equity loans, a HUD reverse mortgage does not require repayment provided the home is the borrower’s primary residence. Lenders regain their principal, plus interest, when the home is sold. The rest of the value of the home goes to the homeowner or to his / her survivors. You can’t ever owe in excess of your home’s appraised value.
If the sales proceeds are insufficient to pay the total amount payable, HUD pays off the financial institution the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow depends on what their age is, current interest rates, other loan fees and the appraised value of their home or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your property is, the older that you are, the lower the interest, the more you are able to borrow.
There are not any asset or income restrictions on borrowers obtaining HUD’s reverse home loan.
Additionally, there are no limits on the value of houses qualifying for a HUD reverse mortgage. The value of the property will be determined by an appraisal. Nonetheless, the total which can be borrowed is derived 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 which is 2 percent of the maximum claim amount which may be borrowed plus a .5% annual premium.