Reverse mortgages (also known as Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly homeowners in California obtain an increased economical stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior property owners age Sixty two and older to convert the home equity in their home into a monthly stream of extra cashflow and/or a credit line to be paid back once they cease to occupy the home.
The mortgage, typically referred to as HECM, is funded by a mortgage company for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the home-owner in making an informed determination of whether the program suits their requirements, they are required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Vin, Fremont Yolo, Beatrice, Conaway, Lovdal
HECM counselors will talk about program eligibility conditions, financial implications and alternatives to receiving a HECM and provisions for the mortgage becoming due and payable. After the conclusion of HECM counseling, the home-owner will be able to make an independent, well informed determination of whether the product will meet their requirements.
California home-owners who satisfy the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Specifications To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have considerable home equity
Reside in your property as a primary residence
Taking part in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current interest rates
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the borrower
No repayment provided that the house is the primary residence.
Fee 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 houses on property
Meet FHA property conditions and flood requirements
How a local reverse mortgage lenders} Program Works For California Homeowners
Homeowners 62 and older which have paid in full their home loans or have only small home loan amounts outstanding, and are also currently residing in the home meet the requirements to take part in HUD’s reverse mortgage loan.
The loan permits homeowners to borrow against the equity in their homes. 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 situations change can restructure their payment options for a nominal fee of $20. Fees can vary dependant upon Financial institution.
Unlike normal home equity loans, a HUD reverse mortgage does not need repayment as long as the home is the borrower’s primary residence. Loan providers regain their principal, plus interest, when the home is sold. The rest of the value of the home would go to the homeowner or to her or his heirs. You can never owe greater than your home’s appraisal value.
If the sales funds are insufficient to pay the balance owed, HUD pays off the lending company the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. That is the great thing about the HUD™ FHA guarantee.
The total a homeowner may borrow is determined by what their age is, current interest rates, other loan costs and the appraisal vlaue of their home or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your home is, the older that you are, the lower the interest, the more you can borrow.
There are not any asset or cash flow limitations on homeowners acquiring HUD’s reverse mortgage.
There’s also no limits on the value of homes qualifying for a HUD reverse mortgage. The value of the home is determined by an appraisal. Nonetheless, the total 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 get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that may be borrowed and then a .5 percent annual premium.