Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are assisting older people in California attain additional economical security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior property owners age 62 and older to transform the equity inside their property to a monthly flow of extra cash flow and/or a line of credit to be paid back when they no longer inhabit the property.
The loan, often called HECM, is funded from a lender such as a mortgage lender, bank, credit union or savings and loan association. To support the home-owner in making a knowledgeable determination of if the program fulfills their requirements, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Idle Wheel Mobile Estates, Leisureville Mobile Home Park, Woodlands Mobile Home Park, Woodland, Browns Corner
HECM counselors will discuss program eligibility requirements, financial consequences and alternatives to getting a HECM and provisions for the mortgage becoming due and payable. After the completion of HECM counseling, the home-owner must be able to make an independent, well informed determination of whether the product will meet their requirements.
California homeowners who meet the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Criteria To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property as well as have considerable equity
Live in your property as a primary residence
Taking part in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications are required of the borrower
No repayment providing the home is the primary residence.
Fee 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 houses on property
Meet FHA property specifications and flood requirements
How a Home Equity Conversion Mortgage} Program Works For California Homeowners
Home-owners 62 and older which have paid off their mortgage loans or have only small loan balances outstanding, and are currently living in the property meet the requirements to participate in HUD’s reverse mortgage loan.
The loan permits homeowners to borrow against the equity in their properties. Homeowners can choose 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 line of credit with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose conditions change can restructure their payment options for a nominal fee of $20. Fees may vary dependant upon Financial institution.
In contrast to normal home equity loans, a HUD reverse mortgage does not need repayment providing the property is the borrower’s principal residence. Financial institutions regain their principal, plus interest, when the property is sold. The remaining value of the property goes to the homeowner or to their survivors. You can’t ever owe more than your property’s appraisal value.
If the sales funds are insufficient to cover the balance payable, HUD pays off 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 great thing about the HUD™ FHA guarantee.
The amount a homeowner can borrow is determined by their age, current interest rates, other loan charges and the appraised value of their property or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your home is, the older you are, the lower the interest, the more you are able to borrow.
There are not any asset or cash flow restrictions on homeowners obtaining HUD’s reverse mortgage.
Additionally, there are no limitations on the value of properties being qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the total that could be borrowed is derived from the lower 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 which can be borrowed plus a .5% annual premium.