Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are assisting older homeowners in California attain better monetary stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be utilized by senior home owners age 62 and older to transform the equity inside their property into a monthly flow of extra cashflow and/or a credit line to be paid back after they no longer occupy the property.
The mortgage, typically referred to as HECM, is funded from a loan company like a mortgage lender, traditional bank, credit union or savings and loan association. To support the home owner in making a well informed determination of if this program suits their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
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HECM counselors will discuss program eligibility requirements, financial consequences and alternatives to receiving a HECM and specifications for the mortgage becoming due and payable. Upon the completion of HECM counseling, the home owner must be able to make an independent, well informed determination of whether this product will fulfill their needs.
California home owners who meet the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lender such as a bank, mortgage 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 significant equity
Occupy your property as a primary residence
Participation in a consumer information session offered by an authorized 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 requirements will be required of the homeowner
No repayment provided that the property is the primary residence.
Loan Costs 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 condos
Manufactured houses on property
Meet FHA property standards and flood requirements
How a reverse mortgage near me in California} Program Works For California Homeowners
Property owners 62 and older which have paid in full their mortgages or have only small mortgage amounts outstanding, and are also currently living in the property meet the criteria to take part in HUD’s reverse mortgage loan.
The loan makes it possible for home owners to borrow on the equity in their homes. 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 conditions change can restructure their payment selections for a nominal fee of $20. Fees may vary depending on Financial institution.
Unlike normal home equity loans, a HUD reverse mortgage does not need repayment as long as the property is the borrower’s principal residence. Mortgage lenders regain their principal, plus interest, once the property is sold. The remaining value of the property would go to the homeowner or to her or his survivors. You can never owe greater than your property’s appraisal value.
If the sales funds are insufficient to repay the total due, HUD pays 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. That is the great thing about the HUD™ FHA guarantee.
The total a homeowner could borrow is dependent upon what their age is, the current interest rate, other loan costs and the appraisal of their property or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your property is, the older that you are, the lower the interest, the more you could borrow.
There isn’t any asset or income restrictions on borrowers receiving HUD’s reverse loan.
In addition there are no restrictions on the value of homes getting qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the 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 home owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount which can be borrowed and then a .5% annual premium.