Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are assisting older residents in California reach improved monetary security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to transform the home equity in their home into a monthly flow of additional cash flow and/or a credit line to be paid back after they no longer inhabit the home.
The loan, also known as HECM, is funded from a lending institution such as a mortgage lender, traditional bank, credit union or savings and loan association. To support the homeowner in making a knowledgeable decision of if the program suits their requirements, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Gold River, Citrus, Soudan, Nimbus, Orangevale
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to receiving a HECM and provisions for the home loan becoming due and payable. After the conclusion of HECM counseling, the homeowner must be able to make an independent, informed decision of whether this product will fulfill their requirements.
California home-owners who fulfill the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Requirements To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and have substantial home equity
Occupy your home as a principal residence
Taking part in a consumer information session given by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the borrower
No repayment as long as the house is the principal residence.
Costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the borrower
HUD-approved condo properties
Manufactured houses on property
Meet FHA property specifications and flood requirements
How a local reverse mortgage lender} Program Works For California Homeowners
Homeowners 62 and older which have paid off their house loans or have only small home loan amounts outstanding, and are presently residing in the home are eligible to take part in HUD’s reverse mortgage program.
The loan enables home-owners to borrow from the equity in their homes. 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 selections for a nominal fee of $20. Fees may vary dependant upon Loan company.
In contrast to standard home equity loans, a HUD reverse mortgage does not need repayment providing the home is the borrower’s principal residence. Loan providers regain their principal, plus interest, once the home is sold. The remainder of the value of the home goes to the homeowner or to their survivors. You can’t ever owe more than your home’s appraised value.
If the sales funds are not enough to cover the total due, HUD pays the lending company the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to provide this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The amount a homeowner may borrow depends upon what their age is, the current interest rates, other loan charges and the appraisal of their home or FHA ‘s mortgage limits for their area, whichever is less. Generally, the more valuable your property is, the older that you are, the lower the rate, the more you are able to borrow.
There aren’t any asset or cash flow restrictions on homeowners acquiring HUD’s reverse house loan.
There are also no limits on the value of homes getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nonetheless, the total that may be borrowed comes from the lower of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the home-owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount which may be borrowed and then a .5% annual premium.