Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are helping elderly people in California attain better monetary security and enjoy their retirement living years to the fullest.
The HECM FHA insured reverse mortgage can be used by senior home-owners age 62 and older to transform the equity in their house to a monthly stream of extra cash flow and/or a credit line to be paid back after they no longer occupy the house.
The loan, often called HECM, is funded by a loan company such as a mortgage lender, bank, credit union or savings and loan association. To support the home-owner in making a knowledgeable determination of if the program suits their requirements, they’re required to get consumer education and counseling from a HUD-approved HECM counselor.
Other California Cities: Sugarfield, Browns Corner, Woodland, Woodlands Mobile Home Park, Leisureville Mobile Home Park
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 completion of HECM counseling, the home-owner should be able to make an independent, well informed determination of whether or not the product will satisfy their requirements.
California homeowners who meet the eligibility requirements can complete a reverse mortgage application by getting in touch with a FHA-approved lender like a bank, mortgage company, or savings and loan association.
Borrower Requirements For Getting A Reverse Mortgage In stateshort:
Age 62 years old or older
Own your own home as well as have considerable equity
Occupy your property as a primary residence
Participation in a consumer information session provided by an authorized HECM counselor
Mortgage Amount Based On:
Age of the youngest homeowner
Current interest rate
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the applicant
No repayment provided that 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 occupied by the borrower
HUD-approved condo properties
Manufactured houses on land
Meet FHA property standards and flood requirements
How a local reverse mortgage expert} Program Works For California Homeowners
Property owners 62 and older that have paid off their house loans or have only small mortgage balances outstanding, and are also presently residing in the house meet the requirements to participate in HUD’s reverse mortgage loan.
The loan makes it possible for property owners to borrow against the equity in their houses. 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 situations change can restructure their payment selections for a nominal fee of $20. Fees may vary dependent on Financial institution.
In contrast to normal home equity loans, a HUD reverse mortgage does not require repayment as long as the house is the borrower’s primary residence. Financial institutions regain their principal, plus interest, whenever the house is sold. The remaining value of the house goes to the homeowner or to her or his survivors. You’re never going to owe above your house’s appraisal value.
If the sales funds are insufficient to repay the total amount payable, HUD will pay the financial institution the amount of the shortfall. HUD’s Federal Housing Administration (FHA) collects an insurance premium from all of the borrowers to provide this coverage. That is the wonderful thing about the HUD™ FHA guarantee.
The total a homeowner may borrow will depend on their age, current interest rate, other loan charges and the appraisal vlaue of their house or FHA ‘s mortgage limits for their area, whichever is less. Usually, the more valuable your property is, the older you are, the lower the interest, the more you are able to borrow.
There are no asset or income limitations on borrowers receiving HUD’s reverse loan.
There are no limitations on the value of houses being qualified for a HUD reverse mortgage. The value of the property will be determined by an appraisal. Nevertheless, the amount which can 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 property owners who get HECM mortgages. Homeowners are charged an upfront insurance premium that is 2% of the maximum claim amount that may be borrowed as well as a .5% annual premium.