Reverse mortgages (known as Home Equity Conversion Mortgages, shortened to HECM) are assisting elderly people in California achieve additional monetary stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage may be used by senior property owners age 62 and older to transform the equity in their property into a monthly stream of additional cash flow and/or a credit line to be repaid after they cease to live in the property.
The mortgage loan, typically referred to as HECM, is funded by a loan company for example a mortgage lender, traditional bank, credit union or savings and loan association. To help the home-owner in making a well informed decision of if the program suits their needs, they are required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Walerga, North Highlands, Antelope, McClellan Park, Sabre City
HECM counselors will discuss program qualification requirements, financial consequences 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 decision of whether the product will fulfill their needs.
California home owners who meet 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 Standards To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your own home and have significant equity
Reside in your house as a principal residence
Participation in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest consumer
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the borrower
No repayment provided the property is the principal residence.
Loan 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 homes on property
Meet FHA property requirements and flood requirements
How the reverse mortgage company in California} Program Works For California Homeowners
Homeowners 62 and older that have paid in full their mortgages or have only small mortgage amounts outstanding, and are also presently residing in the property meet the requirements to take part in HUD’s reverse mortgage loan.
The loan makes it possible for property owners to borrow from 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 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 situations change can restructure their payment options for a nominal fee of $20. Fees may vary dependant upon Loan provider.
Contrary to normal home equity loans, a HUD reverse mortgage does not need repayment providing the property is the borrower’s primary residence. Loan companies regain their principal, plus interest, whenever the property is sold. The remaining value of the property would go to the homeowner or to his / her survivors. You can never owe greater than your property’s appraisal value.
If the sales funds are not sufficient to repay the total owed, HUD pays the mortgage lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all homeowners to supply this coverage. That is the great thing about the HUD™ FHA guarantee.
The total amount a homeowner could borrow depends on what their age is, the current interest rate, other loan charges and the appraisal of their property or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your home is, the older that you are, the lower the rate, the more you’re able to borrow.
There aren’t any asset or cash flow restrictions on homeowners receiving HUD’s reverse mortgage.
There’s also no limitations on the value of houses being qualified for a HUD reverse mortgage. The value of the home will be determined by an appraisal. However, the amount that may 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which can be borrowed along with a .5 percent annual premium.