Reverse mortgages (also referred to as Home Equity Conversion Mortgages, shortened to HECM) are aiding elderly homeowners in California gain improved economical stability and enjoy their retirement years to the fullest extent.
The HECM FHA insured reverse mortgage can be utilized by senior property owners age Sixty two and older to transform the equity inside their property into a monthly flow of extra cashflow and/or a credit line to be paid back when they cease to inhabit the property.
The home loan, also known as HECM, is funded by a mortgage company like a mortgage lender, traditional bank, credit union or savings and loan association. To help the home owner in making an educated determination of if the program meets their needs, they’re required to receive consumer education and counseling by a HUD-approved HECM counselor.
Other California Cities: Marchant, Ensley, Knights Landing, Karnak, Verona
HECM counselors will discuss program eligibility conditions, financial consequences and alternatives to receiving a HECM and specifications for the home loan becoming due and payable. Upon the conclusion of HECM counseling, the home owner will be able to make an independent, educated determination of whether or not the product will satisfy their needs.
California homeowners who meet the eligibility criteria can complete a reverse mortgage application by getting in touch with a FHA-approved lender such as a bank, loan 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 and have substantial equity
Reside in your property as a primary residence
Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest borrower
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements will be required of the homeowner
No repayment as long as the house is the primary residence.
Mortgage Fees 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 houses on land
Meet FHA property guidelines and flood requirements
How a reverse mortgage loan in California} Program Works For California Homeowners
Home owners 62 and older that have paid in full their mortgage loans or have only small loan balances outstanding, and are presently residing in the property meet the criteria to participate in HUD’s reverse mortgage program.
The loan enables property owners to borrow from 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 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 selections for a nominal fee of $20. Fees may vary depending on Financial institution.
Contrary to normal home equity loans, a HUD reverse mortgage does not require repayment so long as the property is the borrower’s principal residence. Loan companies regain their principal, plus interest, once the property is sold. The remaining value of the property would go to the homeowner or to his or her survivors. You’re never going to owe in excess of your property’s appraised value.
If the sales funds are not enough to repay the total owed, HUD will pay the mortgage lender the amount of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the homeowners to provide this coverage. That is the great thing about the HUD™ FHA guarantee.
The total a homeowner could borrow is determined by how old they are, current interest rates, other loan fees and the appraisal vlaue of their property or FHA ‘s mortgage limits with their area, whichever is less. Typically, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
There are no asset or cash flow restrictions on homeowners acquiring HUD’s reverse loan.
There’s also no restrictions on the value of houses getting qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. Nevertheless, the total that may be borrowed comes 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 which is 2% of the maximum claim amount that could be borrowed as well as a .5% annual premium.