Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are serving to elderly homeowners in California reach an increased personal financial security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to convert the equity inside their home to a monthly stream of additional cashflow and/or a credit line to be paid back when they cease to live in the home.
The loan, commonly known as HECM, is funded by a loan company 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 this program fulfills their needs, they are required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Davis Mobile Estates, Davis, Rancho Yolo Mobile Home Park, El Macero, Swingle
HECM counselors will discuss program qualification requirements, financial consequences and alternatives to obtaining a HECM and specifications for the house loan becoming due and payable. After the conclusion of HECM counseling, the homeowner will be able to make an independent, informed decision of whether or not the product will fulfill their needs.
California home-owners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lender 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 home as well as have considerable equity
Occupy your home as a principal residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest applicant
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the homeowner
No repayment provided the home is the principal residence.
Fee may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit lived in by the homeowner
HUD-approved condos
Manufactured homes on land
Meet FHA property standards and flood requirements
How the HECM} Program Works For California Homeowners
Property owners 62 and older which have paid off their mortgages or have only small mortgage amounts remaining, and are also presently living in the home meet the criteria to take part in HUD’s reverse mortgage program.
The loan permits homeowners to borrow from the equity in their properties. Homeowners can select 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 can vary based upon Financial institution.
Contrary to regular home equity loans, a HUD reverse mortgage does not require repayment provided that the home is the borrower’s principal residence. Loan companies regain their principal, plus interest, when the home is sold. The remaining value of the home goes to the homeowner or to his or her heirs. You’re never going to owe in excess of your home’s appraised value.
If the sales proceeds are insufficient to cover the balance 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 homeowners to supply this coverage. This is the beauty of the HUD™ FHA guarantee.
The total amount a homeowner can borrow will depend on their age, current interest rate, other loan fees and the appraisal vlaue of their home or FHA ‘s mortgage limits for 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 aren’t any asset or income limits on homeowners obtaining HUD’s reverse home loan.
In addition there are no limitations on the value of properties being qualified for a HUD reverse mortgage. The value of the property is 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 homeowners who get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount that could be borrowed plus a .5% annual premium.