Reverse mortgages (generally known as Home Equity Conversion Mortgages, abbreviated to HECM) are aiding elderly home owners in California achieve additional personal financial stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior homeowners age 62 and older to transform the equity inside their property to a monthly flow of extra cash flow and/or a credit line to be paid back after they do not live in the property.
The home loan, often called HECM, is funded from a lender like a mortgage lender, traditional bank, credit union or savings and loan association. To help the homeowner in making a well informed decision of if this program fulfills their requirements, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Riverview, Willow Point, Saxon, Freeport, Coniston
HECM counselors will talk about program eligibility conditions, financial consequences and alternatives to getting a HECM and provisions for the mortgage becoming due and payable. After the completion of HECM counseling, the homeowner should be able to make an independent, informed decision of whether the product will meet their requirements.
California homeowners who fulfill the eligibility criteria can complete a reverse mortgage application by speaking to a FHA-approved lender like a bank, mortgage 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 own home and also have considerable equity
Live in your property as a principal residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements will be required of the applicant
No repayment as long as the property is the principal residence.
Fee 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 homes on land
Meet FHA property requirements and flood requirements
How a HECM} Program Works For California Homeowners
Home owners 62 and older that have repaid their home loans or have only small loan amounts outstanding, and are presently residing in the property meet the criteria to take part in HUD’s reverse mortgage program.
The loan permits property owners to borrow from 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 conditions change can restructure their payment options for a nominal fee of $20. Fees can vary depending on Loan provider.
Unlike standard home equity loans, a HUD reverse mortgage does not require repayment providing the property is the borrower’s primary residence. Loan providers 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 heirs. You can’t ever owe above your property’s appraisal value.
If the sales proceeds are not enough to cover the total payable, HUD will pay the lending company the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. That is the beauty of the HUD™ FHA guarantee.
The total amount a homeowner may borrow will depend on what their age is, the current interest rate, other loan costs and the appraised value of their property or FHA ‘s mortgage limits for their area, whichever is less. Generally, the more valuable your house is, the older that you are, the lower the rate, the more you’re able to borrow.
There are no asset or income limits on borrowers acquiring HUD’s reverse loan.
There are no restrictions on the value of properties being qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. However, the 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 property owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount that may be borrowed along with a .5 percent annual premium.