Reverse mortgages (generally known as Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly people in California attain an increased monetary security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior home owners age Sixty two and older to convert the equity inside their property to a monthly flow of extra cash flow and/or a line of credit to be repaid once they cease to live in the property.
The home loan, commonly known as HECM, is funded from a loan company like a mortgage lender, traditional bank, credit union or savings and loan association. To support the home owner in making an educated decision of whether the program fulfills their requirements, they’re required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Davis, Royal Oak Manufactured Home Community, Rancho Yolo Mobile Home Park, El Macero, Swingle
HECM counselors will discuss program qualification requirements, financial implications and alternatives to receiving a HECM and provisions for the home loan becoming due and payable. Upon the conclusion of HECM counseling, the home owner will be able to make an independent, educated decision of whether this product will fulfill their requirements.
California home owners who meet the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender such as a bank, loan company, or savings and loan association.
Borrower Specifications In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home and have substantial equity
Occupy your home as a principal residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications are required of the applicant
No repayment provided the home is the principal residence.
Loan Costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condominiums
Manufactured homes on land
Meet FHA property guidelines and flood requirements
How a local reverse mortgage expert in California} Program Works For California Homeowners
Home owners 62 and older which have paid in full their house loans or have only small loan balances outstanding, and are currently residing in the property meet the requirements to take part in HUD’s reverse mortgage program.
The loan enables home 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 selections for a nominal fee of $20. Fees could differ dependent on Lender.
As opposed to regular home equity loans, a HUD reverse mortgage does not require repayment provided the property is the borrower’s principal residence. Financial institutions recover their principal, plus interest, whenever the property is sold. The rest of the value of the property would go to the homeowner or to his / her heirs. You can’t ever owe more than your property’s appraised value.
If the sales funds are inadequate to pay the total owed, HUD pays off the mortgage lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to supply this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow will depend on how old they are, the current interest rates, other loan fees and the appraisal of their property or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your home is, the older you are, the lower the rate, the more you’ll be able to borrow.
There isn’t any asset or income restrictions on borrowers acquiring HUD’s reverse mortgage.
In addition there are no restrictions on the value of homes being qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the amount which can 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 that may be borrowed along with a .5% annual premium.