Reverse mortgages (also called Home Equity Conversion Mortgages, shortened to HECM) are assisting older homeowners in California gain an increased economical stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage can be used by senior home-owners age 62 and older to transform the equity inside their house into a monthly stream of extra cash flow and/or a line of credit to be repaid after they cease to live in the house.
The loan, typically referred to as HECM, is funded from a mortgage company such as a mortgage lender, bank, credit union or savings and loan association. To help the home owner in making an educated decision of whether this program meets their requirements, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Walnut Trailer Villa, Riverside Mobile Home Park, El Rancho Mobile Park, Capitol City Recreational Vehicle and Mobile Home Park, Trails End Mobile Home Park
HECM counselors will talk about program qualification conditions, financial implications and alternatives to receiving a HECM and specifications for the house loan becoming due and payable. Upon the completion of HECM counseling, the home owner should be able to make an independent, educated decision of whether this product will satisfy their requirements.
California home-owners who satisfy 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 Requirements In Order To Get A Reverse Mortgage In stateshort:
Age 62 years of age or older
Own your property and also have significant equity
Reside in your house as a principal residence
Taking part in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age for the youngest consumer
Current mortgage rate
Lesser of appraised value or the FHA insurance limit
Financial Requirements:
Income and credit rating requirements are required of the applicant
No repayment as long as the house is the principal residence.
Mortgage Fees 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 condos
Manufactured houses on property
Meet FHA property specifications and flood requirements
How the reverse mortgage specialist in California} Program Works For California Homeowners
Home owners 62 and older that have repaid their home loans or have only small loan balances outstanding, and are also currently residing in the house meet the criteria to participate in HUD’s reverse mortgage program.
The loan enables homeowners to borrow against the equity in their homes. 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 circumstances change can restructure their payment options for a nominal fee of $20. Fees could differ based upon Lender.
Contrary to regular home equity loans, a HUD reverse mortgage does not require repayment provided the house is the borrower’s principal residence. Loan 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 or her survivors. You’re never going to owe more than your house’s appraised value.
If the sales funds are not sufficient to cover the total due, HUD pays the financial institution the sum of the deficiency. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to supply this coverage. This is the great thing about the HUD™ FHA guarantee.
The amount a homeowner could borrow depends on how old they are, the current interest rate, other loan fees and the appraisal vlaue of their house or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your house is, the older you are, the lower the rate, the more you’ll be able to borrow.
There isn’t any asset or income limits on borrowers acquiring HUD’s reverse loan.
In addition there are no restrictions on the value of homes getting qualified for a HUD reverse mortgage. The value of the house is determined by an appraisal. Nonetheless, the total that could be borrowed comes from the lower of the appraisal amount or FHA mortgage limit, which is $675,750.
HUD collects funds from insurance premiums charged to the homeowners who get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount which can be borrowed along with a .5% annual premium.