Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are serving to older homeowners in California obtain an increased monetary security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior property owners age 62 and older to transform the equity in their house into a monthly stream of additional cashflow and/or a line of credit to be paid back when they do not occupy the house.
The home loan, also known as HECM, is funded from a mortgage company such as a mortgage lender, bank, credit union or savings and loan association. To help the home-owner in making an informed decision of whether the program meets their needs, they are required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Woodlands Mobile Home Park, Leisureville Mobile Home Park, Royal Palms Mobile Estates, Browns Corner, Idle Wheel Mobile Estates
HECM counselors will talk about program qualification conditions, financial consequences and alternatives to receiving a HECM and provisions for the house loan becoming due and payable. Upon the conclusion of HECM counseling, the home-owner must be able to make an independent, educated decision of whether this product will meet their needs.
California home-owners who meet the eligibility requirements can complete a reverse mortgage application by speaking to a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Criteria In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have substantial equity
Reside in 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 applicant
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications will be required of the borrower
No repayment so long as the house is the principal residence.
Mortgage Fees may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condominiums
Manufactured houses on property
Meet FHA property standards and flood requirements
How the reverse mortgage in California} Program Works For California Homeowners
Home-owners 62 and older that have paid off their mortgages or have only small home loan amounts remaining, and are also presently living in the house meet the criteria to take part in HUD’s reverse mortgage loan.
The loan allows property owners to borrow against the equity in their properties. Homeowners can choose 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 situations change can restructure their payment selections for a nominal fee of $20. Fees could differ dependant upon Lender.
As opposed to normal home equity loans, a HUD reverse mortgage does not need repayment provided that the house is the borrower’s primary residence. Mortgage lenders regain their principal, plus interest, whenever the house is sold. The remainder of the value of the house goes to the homeowner or to their survivors. You can’t ever owe in excess of your house’s appraisal value.
If the sales proceeds are inadequate to cover the amount owed, HUD will pay the lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the beauty of the HUD™ FHA guarantee.
The total amount a homeowner may borrow is determined by their age, current interest rates, other loan costs and the appraisal of their house or FHA ‘s mortgage limits for their area, whichever is less. Typically, the more valuable your house is, the older you are, the lower the rate, the more you can borrow.
There aren’t any asset or cash flow restrictions on borrowers acquiring HUD’s reverse mortgage.
There are no restrictions on the value of properties being qualified for a HUD reverse mortgage. The value of the house will be determined by an appraisal. However, the total amount that may 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that could be borrowed as well as a .5 percent annual premium.