Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are aiding elderly homeowners in California attain greater monetary security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home owners age 62 and older to transform the equity in their home into a monthly flow of extra cash flow and/or a line of credit to be paid back once they do not inhabit the home.
The loan, often called HECM, is funded from a lender like a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making an educated decision of whether this program meets their requirements, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Royal Palms Mobile Estates, Leisureville Mobile Home Park, Woodlands Mobile Home Park, Woodland, Browns Corner
HECM counselors will talk about program eligibility 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 home owner will be able to make an independent, well informed decision of whether or not this product will fulfill their requirements.
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 Specifications When Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your property as well as have considerable equity
Live in your home as a primary residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current mortgage rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications are required of the applicant
No repayment providing the home 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 lived in by the borrower
HUD-approved condo properties
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How the reverse mortgage} Program Works For California Homeowners
Home-owners 62 and older which have repaid their home loans or have only small mortgage amounts remaining, and are also currently residing in the home meet the criteria to take part in HUD’s reverse mortgage program.
The loan permits property owners to borrow on the equity in their homes. Homeowners can select 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 circumstances change can restructure their payment options for a nominal fee of $20. Fees could differ depending on Loan provider.
Unlike ordinary home equity loans, a HUD reverse mortgage does not need repayment provided that the home is the borrower’s primary residence. Loan companies regain their principal, plus interest, whenever the home is sold. The remaining value of the home would go to the homeowner or to his or her heirs. You’re never going to owe in excess of your home’s appraisal value.
If the sales proceeds are not enough to pay the total due, HUD will pay the financial institution the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner could borrow is dependent on how old they are, the current interest rates, other loan charges and the appraised value of their home or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your home is, the older you are, the lower the interest rate, the more you could borrow.
There are no asset or income restrictions on homeowners obtaining HUD’s reverse house loan.
There are also no limitations on the value of homes getting qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the total amount that could be borrowed is derived from the lesser of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the property owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount which may be borrowed along with a .5% annual premium.