Reverse mortgages (also called Home Equity Conversion Mortgages, abbreviated to HECM) are aiding elderly people in California reach an increased economical stability and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage may be used by senior home owners age Sixty two and older to convert the equity inside their house into a monthly flow of extra cash flow and/or a credit line to be paid back after they do not live in the house.
The mortgage, also known as HECM, is funded by a lending institution such as a mortgage lender, bank, credit union or savings and loan association. To support the homeowner in making an informed determination of whether this program meets their needs, they are required to receive consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Cunard, Ensley, Knights Landing, Karnak, Verona
HECM counselors will talk about program qualification conditions, financial consequences and alternatives to receiving a HECM and provisions for the house loan becoming due and payable. Upon the completion of HECM counseling, the homeowner must be able to make an independent, informed determination of whether or not this product will fulfill their needs.
California home-owners who fulfill the eligibility criteria can complete a reverse mortgage application by getting in contact with a FHA-approved lending institution like a bank, mortgage 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 as well as have significant equity
Live in your property as a primary residence
Participation in a consumer information session given by an approved HECM counselor
Mortgage Amount Based On:
Age for the youngest homeowner
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 provided that the property is the primary residence.
Fee may be financed in the mortgage
Real Estate Requirements:
Single family home or 1-4 unit home with one unit lived in by the borrower
HUD-approved condos
Manufactured houses on property
Meet FHA property standards and flood requirements
How the local reverse mortgage experts} Program Works For California Homeowners
Home-owners 62 and older which have paid back their mortgages or have only small home loan amounts remaining, and are currently residing in the house meet the requirements to participate in HUD’s reverse mortgage loan.
The loan allows homeowners to borrow from the equity in their homes. Homeowners can choose 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 credit line with monthly installments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly installments for a fixed period of months selected by the borrower.
Homeowners whose conditions change can restructure their payment options for a nominal fee of $20. Fees can vary based upon Loan provider.
Unlike ordinary home equity loans, a HUD reverse mortgage does not need repayment as long as the house is the borrower’s primary residence. Financial institutions recover their principal, plus interest, whenever the house is sold. The rest of the value of the house goes to the homeowner or to her or his survivors. You can’t ever owe more than your house’s appraised value.
If the sales proceeds are insufficient to repay the amount payable, HUD pays the lending company the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to supply this coverage. This is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner may borrow is determined by how old they are, current interest rate, other loan charges and the appraisal of their house or FHA ‘s mortgage limits with their area, whichever is less. Usually, the more valuable your home is, the older that you are, the lower the interest, the more you could borrow.
There are not any asset or income restrictions on borrowers receiving HUD’s reverse home loan.
There’s also no restrictions on the value of homes being qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. However, the total that may 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 homeowners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium which is 2% of the maximum claim amount that may be borrowed along with a .5 percent annual premium.