Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are aiding older homeowners in California obtain additional economical stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior home owners age 62 and older to convert the equity inside their house to a monthly stream of additional cash flow and/or a line of credit to be repaid once they no longer occupy the house.
The home loan, typically referred to as HECM, is funded from a loan company such as a mortgage lender, bank, credit union or savings and loan association. To help the homeowner in making a well informed decision of if this program fulfills their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Nimbus, Citrus, Fair Oaks, Soudan, Alder Creek
HECM counselors will discuss program eligibility conditions, financial consequences and alternatives to obtaining a HECM and specifications for the home loan becoming due and payable. Upon the conclusion of HECM counseling, the homeowner should be able to make an independent, educated decision of whether this product will satisfy their needs.
California home-owners who satisfy the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association.
Borrower Criteria To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and have sizeable equity
Reside in your house as a principal residence
Participation in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications will be required of the homeowner
No repayment so long as the house is the principal residence.
Mortgage Fees may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit occupied by the borrower
HUD-approved condominiums
Manufactured homes on land
Meet FHA property specifications and flood requirements
How the reverse mortgage} Program Works For California Homeowners
Homeowners 62 and older who have paid off their home loans or have only small loan balances remaining, and are presently residing in the house are eligible to take part in HUD’s reverse mortgage program.
The loan permits homeowners to borrow on 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 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 circumstances change can restructure their payment options for a nominal fee of $20. Fees could differ dependant upon Loan provider.
Unlike regular home equity loans, a HUD reverse mortgage doesn’t require repayment so long as the house is the borrower’s principal residence. Loan providers recover their principal, plus interest, once the house is sold. The rest of the value of the house would go to the homeowner or to her or his survivors. You can never owe greater than your house’s appraisal value.
If the sales funds are not sufficient to repay the balance owed, HUD will pay the mortgage lender the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total amount a homeowner could borrow is determined by how old they are, the current interest rate, other loan costs and the appraised value of their house 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 rate, the more you can borrow.
There are not any asset or cash flow limitations on homeowners acquiring HUD’s reverse mortgage.
There are no limits on the value of properties being qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nevertheless, the amount 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 homeowners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount which can be borrowed plus a .5 percent annual premium.