California Reverse Mortgage Loans – Getting income from the Home
Reverse mortgages are becoming extremely popular with seniors in California since the U.S. Department of Housing and Urban Development (HUD) created one of the first.
Thousands of senior citizen Have only one assets , their home , but they may be short of cash , and struggling to keep their property . The California reverse home mortgage allows elderly people to supplement social security, meet unexpected medical expenses, make home improvements, and more.
A reverse mortgage allows the homeowner to convert a portion of the home equity into cash. Unlike a traditional home equity loan (HELOC) or second mortgage, repayment is not required until the borrower no longer uses the home as a principal residence.
To be eligible the borrower must be at least 62 years old; own the home and have a low mortgage balance that can be paid off at closing with proceeds from the California reverse mortgage loan, and must live in the home.
The reverse mortgage loan amount depends on borrower’s age, current interest rate, other loan fees, the value of the house , the location and the age of the owner
.
California reverse mortgage borrowers can expect a loan amount from 45% to 75% of the value of the home.
Remember that California Reverse Mortgages are Costly: It is true closing costs for reverse mortgages are more costly than typical forward mortgages.
You must attend California reverse mortgage counseling session (FHA counselor)
The counseling session takes about an hour .
Seniors do not have to meet any standards of income or credit requirements in order to qualify for a California Reverse Mortgage.
California Reverse Mortgage provides mortgages under three categories:
Home Equity Conversion Mortgage
Single Purpose Reverse Mortgage
Proprietary Reverse Mortgage
The Home Equity Conversion Mortgage is federally insured, where as the other two are offered by government licensed agencies, by banks, and by other private mortgage financing institutions.
With a traditional second mortgage loan, or a California home equity line of credit (HELOC), there must be sufficient income versus debt ratio to qualify for the loan, and monthly mortgage payments are required.
The loan is not repayable as long as one of the borrowers continues to live in the house and keeps the taxes and insurance current. A long living person continues to occupy the house and receive monthly pay even after the equity in the house gets used up .
If the home is sold or no longer used as a primary residence, the homeowner or the estate repays the reverse mortgage, plus interest and other fees, to the reverse mortgage lender.
The remaining home equity belongs to homeowner or heirs. No other assets will be affected by a California reverse mortgage loan and the debt will never be passed along to the estate or heirs.
A down side to reverse mortgages is that because the borrowers continue to own the house , they are responsible for taxes , insurance and repairs .
