Reverse mortgages (generally known as Home Equity Conversion Mortgages, shortened to HECM) are serving to elderly homeowners in California achieve better financial stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior home owners age 62 and older to convert the equity inside their house to a monthly flow of extra cashflow and/or a credit line to be paid back when they cease to inhabit the house.
The loan, commonly known as HECM, is funded from a lender for example a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making an educated decision of if the program satisfies their needs, they’re required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Vineyard, Sheldon, Fallbrook, Camden, Wilton
HECM counselors will discuss program eligibility requirements, financial implications and alternatives to receiving a HECM and provisions for the mortgage becoming due and payable. Upon 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 needs.
California homeowners who fulfill the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lending institution such as a bank, loan company, or savings and loan association.
Borrower Standards To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and also have sizeable equity
Occupy your house as a primary residence
Participation in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications are required of the borrower
No repayment provided that the home is the primary residence.
Closing costs 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 houses on property
Meet FHA property standards and flood requirements
How the local reverse mortgage} Program Works For California Homeowners
Home-owners 62 and older which have paid in full their house loans or have only small home loan balances outstanding, and are also presently living in the house are eligible to take part in HUD’s reverse mortgage program.
The loan permits homeowners to borrow against 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 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees can vary based upon Financial institution.
Contrary to normal home equity loans, a HUD reverse mortgage does not need repayment provided that the house is the borrower’s primary residence. Lenders regain their principal, plus interest, when the house is sold. The rest of the value of the house goes to the homeowner or to his or her survivors. You can’t ever owe above your house’s appraisal value.
If the sales proceeds are insufficient to cover the amount due, HUD will pay the mortgage lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner may borrow is dependent on what their age is, current interest rate, other loan costs and the appraisal vlaue of their house 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’re able to borrow.
There are no asset or cash flow limits on borrowers obtaining HUD’s reverse mortgage.
There’s also no limits on the value of properties getting qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. Nonetheless, the amount that could 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount which can be borrowed and then a .5% annual premium.