Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are aiding older residents in California gain an increased financial stability and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior home owners age 62 and older to convert the equity in their house into a monthly flow of additional cash flow and/or a line of credit to be repaid once they cease to inhabit the house.
The loan, often called HECM, is funded by a loan company for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the homeowner in making an informed determination of if this program suits their needs, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Arden-Arcade, Town and Country Village, Ben Ali, Arden Town, Del Paso Heights
HECM counselors will talk about program qualification requirements, financial consequences and alternatives to receiving a HECM and specifications for the mortgage loan becoming due and payable. After the completion of HECM counseling, the homeowner will be able to make an independent, informed determination of whether the product will meet their needs.
California home owners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lender like a bank, mortgage company, or savings and loan association.
Borrower Specifications When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home as well as have significant equity
Reside in your property as a primary residence
Participation in a consumer information session given by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
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 providing the house is the primary residence.
Loan Costs may be financed in the mortgage
Real Estate Requirements:
Single family house or 1-4 unit house with one unit occupied by the homeowner
HUD-approved condos
Manufactured homes on property
Meet FHA property conditions and flood requirements
How the local reverse mortgage experts} Program Works For California Homeowners
Home owners 62 and older which have repaid their home loans or have only small mortgage amounts outstanding, and are presently residing in the house meet the criteria to participate in HUD’s reverse mortgage program.
The loan makes it possible for 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 line of credit with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly installments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment selections for a nominal fee of $20. Fees could differ depending on Financial institution.
In contrast to standard home equity loans, a HUD reverse mortgage does not require repayment so long as the house is the borrower’s primary residence. Mortgage companies regain their principal, plus interest, whenever the house is sold. The remaining value of the house goes to the homeowner or to their survivors. You can never owe greater than your house’s appraised value.
If the sales proceeds are insufficient to cover the total amount owed, HUD pays off the mortgage lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. That is the beauty of the HUD™ FHA guarantee.
The amount a homeowner could borrow is determined by how old they are, current interest rate, other loan charges and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
There isn’t any asset or income limitations on homeowners acquiring HUD’s reverse home loan.
In addition there are no restrictions on the value of houses getting qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. Nonetheless, the total amount that may 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 get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that may be borrowed as well as a .5 percent annual premium.