Reverse mortgages (often called Home Equity Conversion Mortgages, abbreviated to HECM) are helping older residents in California gain additional monetary security and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior homeowners age Sixty two and older to convert the home equity in their home into a monthly flow of extra cash flow and/or a credit line to be repaid when they no longer inhabit the home.
The loan, also known as HECM, is funded from a loan company like a mortgage lender, traditional bank, credit union or savings and loan association. To help the home-owner in making an educated determination of if this program fulfills their needs, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Dillard, Sheldon, Walmort, Coffing, Fallbrook
HECM counselors will talk about program eligibility requirements, financial implications and alternatives to getting a HECM and provisions for the mortgage loan becoming due and payable. Upon the completion of HECM counseling, the home-owner will be able to make an independent, educated determination of whether this product will meet their needs.
California homeowners who meet 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 Requirements To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and also have substantial home equity
Occupy your property as a principal residence
Taking part in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications will be required of the applicant
No repayment providing the house is the principal 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 condominiums
Manufactured houses on property
Meet FHA property guidelines and flood requirements
How the local reverse mortgage specialist} Program Works For California Homeowners
Home-owners 62 and older which have paid off their home loans or have only small loan balances remaining, and are presently residing in the home meet the requirements to take part in HUD’s reverse mortgage program.
The loan makes it possible for 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 selections for a nominal fee of $20. Fees may vary dependent on Lender.
Contrary to normal home equity loans, a HUD reverse mortgage does not require repayment providing the home is the borrower’s principal residence. Mortgage companies regain their principal, plus interest, when the home is sold. The remainder of the value of the home would go to the homeowner or to his or her survivors. You’re never going to owe above your home’s appraisal value.
If the sales proceeds are not sufficient to repay the amount owed, HUD pays off the lender the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to provide this coverage. This is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner may borrow will depend on how old they are, current interest rates, other loan charges and the appraisal of their home or FHA ‘s mortgage limits with their area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you’ll be able to borrow.
There isn’t any asset or cash flow limits on homeowners receiving HUD’s reverse house loan.
In addition there are no restrictions on the value of homes being qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. However, the total amount which can be borrowed is derived 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% of the maximum claim amount that could be borrowed as well as a .5 percent annual premium.