Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are assisting older home owners in California achieve improved personal financial security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior homeowners age 62 and older to transform the equity in their house into a monthly flow of extra cashflow and/or a line of credit to be repaid after they do not occupy the house.
The mortgage loan, often called HECM, is funded from a loan company like a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a knowledgeable decision of if the program fulfills their needs, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
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HECM counselors will talk about program eligibility requirements, financial implications and alternatives to obtaining a HECM and provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, the home owner should be able to make an independent, informed decision of whether this product will satisfy their needs.
California home-owners who meet the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lending institution like a bank, loan company, or savings and loan association.
Borrower Standards For Getting A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your home and have substantial equity
Occupy your house as a primary residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit rating qualifications will be required of the applicant
No repayment provided the house is the primary 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 borrower
HUD-approved condos
Manufactured houses on land
Meet FHA property guidelines and flood requirements
How the reverse mortgage near me} Program Works For California Homeowners
Homeowners 62 and older who have paid off their house loans or have only small mortgage balances remaining, and are also presently living in the house meet the requirements to participate in HUD’s reverse mortgage loan.
The loan makes it possible for property 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 circumstances change can restructure their payment options for a nominal fee of $20. Fees can vary dependant upon Loan company.
As opposed to regular home equity loans, a HUD reverse mortgage does not require repayment as long as the house is the borrower’s primary residence. Loan companies recover their principal, plus interest, whenever the house is sold. The remaining value of the house would go to the homeowner or to her or his heirs. You can’t ever owe greater than your house’s appraised value.
If the sales funds are not enough to pay the total amount owed, HUD pays off the financial institution the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total amount a homeowner may borrow depends upon their age, the current interest rates, other loan fees and the appraisal vlaue of their house or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your house is, the older that you are, the lower the interest, the more you’ll be able to borrow.
There aren’t any asset or income restrictions on borrowers obtaining 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 house is determined by an appraisal. However, the 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 obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that may be borrowed as well as a .5 percent annual premium.