Reverse mortgages (also known as Home Equity Conversion Mortgages, shortened to HECM) are helping older home owners in California obtain improved monetary security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage could be used by senior property owners age 62 and older to convert the home equity in their home to a monthly flow of additional cash flow and/or a credit line to be paid back after they do not inhabit the home.
The home loan, also known as HECM, is funded from a lender for example a mortgage lender, bank, credit union or savings and loan association. To assist the home owner in making a well informed determination of whether the program satisfies their requirements, they are required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Wilton, Walmort, Sheldon, Coffing, Fallbrook
HECM counselors will talk about program qualification conditions, financial implications and alternatives to obtaining a HECM and provisions for the mortgage loan becoming due and payable. Upon the conclusion of HECM counseling, the home owner should be able to make an independent, informed determination of whether the product will satisfy their requirements.
California homeowners who fulfill the eligibility requirements can complete a reverse mortgage application by getting in contact with a FHA-approved lender 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 property as well as have substantial home equity
Reside in your property as a principal residence
Taking part in a consumer information session offered by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit history qualifications are required of the homeowner
No repayment provided the house is the principal residence.
Closing costs may be financed in the mortgage
Property Requirements:
Single family home or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condos
Manufactured houses on land
Meet FHA property conditions and flood requirements
How a reverse mortgage experts in California} Program Works For California Homeowners
Home owners 62 and older who have paid back their mortgages or have only small home loan amounts outstanding, and are presently residing in the home meet the criteria to participate in HUD’s reverse mortgage program.
The loan permits home owners to borrow on 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 selections for a nominal fee of $20. Fees could differ dependant upon Loan company.
Contrary to ordinary home equity loans, a HUD reverse mortgage doesn’t require repayment providing the home is the borrower’s primary residence. Loan companies regain their principal, plus interest, whenever the home is sold. The remaining value of the home would go to the homeowner or to his / her survivors. You can’t ever owe more than your home’s appraisal value.
If the sales funds are insufficient to cover the balance due, HUD pays the mortgage lender the sum of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all borrowers to supply this coverage. This is the beauty of the HUD™ FHA guarantee.
The amount of money a homeowner can borrow is dependent on how old they are, current interest rates, other loan costs and the appraisal vlaue of their home or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your property is, the older you are, the lower the rate, the more you could borrow.
There aren’t any asset or cash flow 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 property will be determined by an appraisal. Nonetheless, the total amount 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 home owners who obtain HECM mortgages. Homeowners are charged an upfront insurance premium that is 2 percent of the maximum claim amount that may be borrowed and then a .5 percent annual premium.