Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are aiding older residents in California obtain better personal financial 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 Sixty two and older to convert the home equity inside their property into a monthly flow of extra cash flow and/or a line of credit to be paid back after they no longer occupy the property.
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 homeowner in making an educated decision of whether the program meets their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Mayhew, Rosemont, Manlove, Arden Town, Perkins
HECM counselors will talk about program qualification 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 homeowner should be able to make an independent, well informed decision of whether the product will fulfill their needs.
California home-owners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lender like a bank, loan company, or savings and loan association.
Borrower Criteria For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your home as well as have considerable home equity
Occupy your house as a primary residence
Taking part in a consumer information session given by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest applicant
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications will be required of the borrower
No repayment provided that the property is the primary residence.
Fee 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 condos
Manufactured homes on property
Meet FHA property standards and flood requirements
How the reverse mortgage lenders in California} Program Works For California Homeowners
Homeowners 62 and older that have paid back their house loans or have only small loan balances remaining, and are also presently residing in the property are eligible to participate in HUD’s reverse mortgage program.
The loan allows property owners to borrow on the equity in their properties. Homeowners can select from five payment plans:
Tenure – equal monthly installments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term – equal monthly installmentsfor 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 installments for as long as the borrower remains in the home.
Modified Term – combination of line of credit with monthly installments 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 Lender.
Contrary to ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the property is the borrower’s primary residence. Mortgage lenders regain their principal, plus interest, whenever the property is sold. The rest of the value of the property would go to the homeowner or to her or his heirs. You can never owe in excess of your property’s appraised value.
If the sales funds are insufficient to cover the balance payable, HUD will pay the lending company the amount 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 total a homeowner can borrow is dependent on their age, current interest rates, other loan costs and the appraisal vlaue of their property or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your property is, the older you are, the lower the interest, the more you’re able to borrow.
There are not any asset or income limitations on homeowners receiving HUD’s reverse house loan.
Additionally, there are no limits on the value of properties being qualified for a HUD reverse mortgage. The value of the property will be determined by an appraisal. However, the total amount 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 property owners who get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that could be borrowed along with a .5 percent annual premium.