Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are serving to older residents in California gain additional personal financial security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior homeowners age 62 and older to transform the equity inside their house to a monthly flow of extra cashflow and/or a line of credit to be paid back once they cease to occupy the house.
The home loan, often called HECM, is funded by a lender like a mortgage lender, bank, credit union or savings and loan association. To assist the home-owner in making an educated determination of whether this program satisfies their requirements, they’re required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Beatrice, Kiesel, Fremont Yolo, Conaway, Lovdal
HECM counselors will discuss program eligibility conditions, financial implications and alternatives to obtaining a HECM and provisions for the mortgage becoming due and payable. After the conclusion of HECM counseling, the home-owner should be able to make an independent, informed determination of whether this product will fulfill their requirements.
California home-owners who satisfy the eligibility criteria can complete a reverse mortgage application by speaking to a FHA-approved lender such as a bank, loan company, or savings and loan association.
Borrower Specifications When Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and have sizeable equity
Occupy your home as a primary residence
Participation in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit qualifications are required of the applicant
No repayment so long as the house is the primary residence.
Closing costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit lived in by the homeowner
HUD-approved condos
Manufactured houses on land
Meet FHA property conditions and flood requirements
How the reverse mortgage company} Program Works For California Homeowners
Home owners 62 and older who have paid back their mortgage loans or have only small loan amounts remaining, and are also presently residing in the house are eligible to take part in HUD’s reverse mortgage loan.
The loan makes it possible for home-owners to borrow from the equity in their houses. 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 dependant upon Loan company.
Unlike normal home equity loans, a HUD reverse mortgage does not need repayment providing the house is the borrower’s principal residence. Lenders regain their principal, plus interest, once the house is sold. The rest of the value of the house goes to the homeowner or to his or her heirs. You can’t ever owe above your house’s appraisal value.
If the sales proceeds are not sufficient to pay the total amount owed, 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 homeowners to provide this coverage. This is the beauty of the HUD™ FHA guarantee.
The amount a homeowner could borrow depends on how old they are, current interest rates, other loan fees and the appraised value of their house or FHA ‘s mortgage limits for their area, whichever is less. Generally, the more valuable your property is, the older that you are, the lower the interest, the more you’re able to borrow.
There isn’t any asset or income limits on homeowners receiving HUD’s reverse loan.
There’s also no limits on the value of houses getting qualified for a HUD reverse mortgage. The value of the property will be determined by an appraisal. Nonetheless, the amount that may 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 home-owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2 percent of the maximum claim amount which may be borrowed as well as a .5% annual premium.