Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are aiding elderly homeowners in California obtain an increased financial security and enjoy their retirement years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior home owners age 62 and older to convert the home equity inside their house to a monthly flow of additional cash flow and/or a credit line to be repaid once they do not inhabit the house.
The mortgage, often called HECM, is funded from a lender like a mortgage lender, bank, credit union or savings and loan association. To help the homeowner in making a well informed determination of whether the program fulfills their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Polk, Parkway-South Sacramento, Fruitridge Manor, Parkway, Pollock
HECM counselors will discuss program qualification conditions, financial implications and alternatives to receiving a HECM and provisions for the mortgage becoming due and payable. Upon the conclusion of HECM counseling, the homeowner should be able to make an independent, educated determination of whether this product will meet their needs.
California homeowners 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 In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have substantial home equity
Occupy your property as a primary residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit requirements are required of the borrower
No repayment as long as the home is the primary residence.
Mortgage Fees may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit lived in by the homeowner
HUD-approved condos
Manufactured homes on property
Meet FHA property conditions and flood requirements
How a FHA reverse mortgage} Program Works For California Homeowners
Property owners 62 and older which have paid in full their mortgage loans or have only small home loan amounts remaining, and are currently living in the house meet the requirements to participate in HUD’s reverse mortgage loan.
The loan permits property owners to borrow against the equity in their properties. 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 credit line with monthly payments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly payments for a fixed period of months selected by the borrower.
Homeowners whose situations change can restructure their payment selections for a nominal fee of $20. Fees may vary dependant upon Lender.
Unlike regular home equity loans, a HUD reverse mortgage does not need repayment as long as the house is the borrower’s principal residence. Loan companies regain their principal, plus interest, once the house is sold. The rest of the value of the house would go to the homeowner or to his or her survivors. You can’t ever owe in excess of your house’s appraisal value.
If the sales funds are inadequate to pay the amount owed, HUD will pay the lending company the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to supply this coverage. That is the great thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow depends upon how old they are, current interest rates, other loan fees and the appraised value of their house or FHA ‘s mortgage limits with their area, whichever is less. Generally, the more valuable your property is, the older you are, the lower the rate, the more you could borrow.
There isn’t any asset or cash flow limits on homeowners acquiring HUD’s reverse home loan.
There are no restrictions on the value of properties qualifying for a HUD reverse mortgage. The value of the property is determined by an appraisal. Nevertheless, the total which can be borrowed comes 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 get HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount that may be borrowed and then a .5 percent annual premium.