Reverse mortgages (also known as Home Equity Conversion Mortgages, abbreviated to HECM) are helping older residents in California achieve an increased personal financial stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior property owners age Sixty two and older to convert the equity inside their house to a monthly flow of extra cash flow and/or a credit line to be repaid when they cease to live in the house.
The mortgage loan, often called HECM, is funded by a loan company for example a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making a knowledgeable decision of whether the program suits their requirements, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: North Sacramento, Swanston, Sacramento, Elvas, Hagginwood
HECM counselors will discuss program eligibility requirements, financial consequences and alternatives to getting a HECM and specifications for the mortgage loan becoming due and payable. After the completion of HECM counseling, the home owner must be able to make an independent, informed decision of whether this product will satisfy their requirements.
California home owners who fulfill the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lender like a bank, loan 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 home as well as have substantial equity
Live in your property as a principal residence
Taking part in a consumer information session offered by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history requirements will be required of the borrower
No repayment so long as the home is the principal residence.
Costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit house with one unit lived in by the borrower
HUD-approved condo properties
Manufactured homes on property
Meet FHA property standards and flood requirements
How the Home Equity Conversion Mortgage} Program Works For California Homeowners
Property owners 62 and older who have paid in full their mortgages or have only small loan amounts outstanding, and are presently residing in the house are eligible to participate in HUD’s reverse mortgage loan.
The loan makes it possible for home owners to borrow from the equity in their properties. 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 could differ depending on Lender.
In contrast to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment provided that the house is the borrower’s primary residence. Lenders regain their principal, plus interest, once the house is sold. The rest of the value of the house goes to the homeowner or to his / her survivors. You’re never going to owe greater than your house’s appraised value.
If the sales funds are inadequate to repay the balance payable, HUD will pay the mortgage lender the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. This is the wonderful thing about the HUD™ FHA guarantee.
The amount of money a homeowner may borrow will depend on their age, current interest rates, other loan costs and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Normally, the more valuable your property is, the older that you are, the lower the interest, the more you’ll be able to borrow.
There isn’t any asset or income limits on borrowers acquiring HUD’s reverse mortgage.
There are no limitations on the value of properties qualifying for a HUD reverse mortgage. The value of the property is determined by an appraisal. However, the amount that may 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 home owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount which may be borrowed along with a .5% annual premium.