Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly residents in California gain greater monetary stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior home owners age 62 and older to transform the equity inside their house to a monthly stream of extra cashflow and/or a line of credit to be repaid once they do not occupy the house.
The mortgage, commonly known as HECM, is funded by a lender such as a mortgage lender, bank, credit union or savings and loan association. To support the home-owner in making a well informed decision of if this program meets their requirements, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Laguna West-Lakeside, Camden, Laguna West, Elk Grove, Franklin
HECM counselors will talk about program qualification requirements, financial consequences and alternatives to getting a HECM and provisions for the mortgage loan becoming due and payable. After the conclusion of HECM counseling, the home-owner must be able to make an independent, informed decision of whether the product will satisfy their requirements.
California homeowners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lender like a bank, mortgage company, or savings and loan association.
Borrower Criteria In Order To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home and have considerable equity
Live in your home as a principal residence
Taking part in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications will be required of the applicant
No repayment provided the home is the principal residence.
Closing costs may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condo properties
Manufactured houses on land
Meet FHA property requirements and flood requirements
How a local reverse mortgage} Program Works For California Homeowners
Homeowners 62 and older that have paid in full their mortgage loans or have only small mortgage balances outstanding, and are also currently residing in the house meet the criteria to take part in HUD’s reverse mortgage program.
The loan makes it possible for home owners to borrow against the equity in their houses. 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 options for a nominal fee of $20. Fees can vary dependant upon Financial institution.
Contrary to normal home equity loans, a HUD reverse mortgage doesn’t require repayment so long as the house is the borrower’s principal residence. Mortgage companies recover their principal, plus interest, when the house is sold. The rest of the value of the house goes to the homeowner or to his / her heirs. You can’t ever owe in excess of your house’s appraised value.
If the sales funds are insufficient to cover the total due, HUD will pay the mortgage lender the amount of the shortfall. 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 amount of money a homeowner could borrow depends upon their age, current interest rate, 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 interest rate, the more you could borrow.
There aren’t any asset or cash flow limitations on borrowers receiving HUD’s reverse house loan.
There are no restrictions on the value of houses being qualified for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the total which can be borrowed is derived from the lesser of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the home owners who receive HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that could be borrowed and then a .5 percent annual premium.