Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are serving to older home owners in California achieve improved financial security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home-owners age 62 and older to convert the home equity inside their house into a monthly stream of additional cash flow and/or a line of credit to be repaid once they no longer occupy the house.
The mortgage, also known as HECM, is funded by a mortgage company like a mortgage lender, bank, credit union or savings and loan association. To assist the homeowner in making a well informed decision of if the program meets their needs, they’re required to receive consumer education and counseling using a HUD-approved HECM counselor.
Other California Cities: Hood Junction, Randall, Central, Franklin, Clarksburg
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to receiving a HECM and provisions for the home loan becoming due and payable. After the completion of HECM counseling, the homeowner will be able to make an independent, educated decision of whether the product will meet their needs.
California home owners who satisfy the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lender such as a bank, mortgage company, or savings and loan association.
Borrower Criteria To Get A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home as well as have sizeable home equity
Occupy your property 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 appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the borrower
No repayment provided that the home is the principal residence.
Mortgage Fees 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 condo properties
Manufactured homes on land
Meet FHA property conditions and flood requirements
How a reverse mortgage loans} Program Works For California Homeowners
Property owners 62 and older who have paid off their mortgages or have only small loan amounts remaining, and are also currently residing in the house are eligible to participate in HUD’s reverse mortgage program.
The loan permits property owners to borrow against 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 selections for a nominal fee of $20. Fees could differ dependant upon Financial institution.
As opposed to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment as long as the house is the borrower’s primary residence. Mortgage companies recover their principal, plus interest, when the house is sold. The remaining value of the house would go to the homeowner or to his / her heirs. You can never owe more than your house’s appraisal value.
If the sales proceeds are not sufficient to cover the amount payable, HUD will pay the lending company the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The total a homeowner can borrow is dependent upon their age, the current interest rate, other loan costs and the appraisal of their house or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your property is, the older you are, the lower the interest rate, the more you can borrow.
There isn’t any asset or income restrictions on borrowers obtaining HUD’s reverse loan.
Additionally, there are no restrictions on the value of properties qualifying for a HUD reverse mortgage. The value of the property 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 plus a .5 percent annual premium.