Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly residents in California achieve an increased personal financial stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior home-owners age 62 and older to transform the home equity inside their property into a monthly flow of additional cashflow and/or a credit line to be paid back after they cease to inhabit the property.
The home loan, often called HECM, is funded from a loan company like a mortgage lender, traditional bank, credit union or savings and loan association. To assist the home-owner in making an informed decision of if this program satisfies their needs, they’re required to get consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Hagginwood, Ben Ali, Town and Country Village, McClellan Park, Robla
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to receiving a HECM and provisions for the house loan becoming due and payable. Upon the completion of HECM counseling, the home-owner must be able to make an independent, informed decision of whether or not the product will satisfy their needs.
California home owners who fulfill the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lending institution 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 as well as have significant home equity
Occupy your house as a principal residence
Taking part in a consumer information session offered by an approved 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 rating qualifications will be required of the borrower
No repayment provided that the home is the principal residence.
Loan Costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condo properties
Manufactured homes on property
Meet FHA property conditions and flood requirements
How a local reverse mortgage} Program Works For California Homeowners
Home owners 62 and older which have paid off their home loans or have only small mortgage amounts remaining, and are also currently residing in the property meet the criteria to take part in HUD’s reverse mortgage program.
The loan permits property owners to borrow against 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 options for a nominal fee of $20. Fees could differ dependant upon Loan company.
In contrast to standard home equity loans, a HUD reverse mortgage doesn’t require repayment so long as the property is the borrower’s primary residence. Loan providers regain their principal, plus interest, when the property is sold. The rest of the value of the property goes to the homeowner or to his / her heirs. You can never owe in excess of your property’s appraisal value.
If the sales proceeds are inadequate to pay the total owed, HUD will pay the lender the sum of the deficiency. 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 amount of money a homeowner could borrow depends on how old they are, the current interest rates, other loan costs and the appraised value of their property or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your house is, the older that you are, the lower the interest, the more you’re able to borrow.
There aren’t any asset or cash flow limits on homeowners obtaining HUD’s reverse loan.
In addition there are no limitations on the value of homes getting qualified for a HUD reverse mortgage. The value of the house will be determined by an appraisal. Nevertheless, the total 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 property owners who get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that could be borrowed along with a .5% annual premium.