Oregon Reverse Mortgage Info

Top 10 Things to Know if You’re Interested in a Reverse Mortgage

By Laurie Willis

Oregon Reverse mortgages are becoming popular in Oregon and in America. HUD’s Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA’s reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. Since your home is probably your largest single investment, it’s smart to know more about reverse mortgages and decide if one is right for you.

1. What is a Reverse Mortgage?

It’s a loan against your home that requires no repayment for as long as you live there. A reverse mortgage allows you to convert a portion of the equity in your home into cash. Unlike a traditional home loan, no repayment is required until the borrower(s) no longer use the home as their primary residence.

2. How do I Qualify for a Reverse Mortgage?

To be eligible for a reverse mortgage all borrowers must be 62 years of age or older. You must own your home outright, or have a low mortgage balance that can be paid off with proceeds from the reverse loan, and you must live in the home 6 months of the year.

3. What types of homes are eligible?

Your home must be a single-family property, PUD, or a 1-4 unit home with one unit occupied by the borrower(s). HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

4. What’s the difference between a Reverse Mortgage and a bank home equity loan?

With a traditional second mortgage, or home equity line of credit you must document you income and ability to repay the loan. There are also minimum credit score requirements for loan qualification, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income or credit scores.

5. Can the lender take my home away if I outlive the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.

6. Will I still have an estate to leave my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees to the lender. The remaining equity in your home, if any belongs to you or to your heirs. Remember, reverse mortgages are generally ‘non-recourse’ loans, which means the lender does not have recourse to anything other than your home, not your income, your assets, or your heirs income or assets.

7. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

8. Should I use and estate planning service to find a reverse mortgage?

FHA does NOT recommend using any service that charges a fee for referring a borrower to and FHA lender. FHA provides the information for free, and HUD-approved housing counseling agencies are available for a very low cost. In fact, counseling is a HUD requirement before borrowers can start the reverse mortgage borrowing process.

9. How do I receive my payment?

In the past, there were many options to receiving payment. However, most reverse mortgage lenders are limiting the rate/term for reverse mortgages to a fixed rate only, which requires the borrow to receive a lump sum payment upon closing

10. Can I use a Reverse Mortgage to Purchase a Home?

Yes, effective January 2009 you can now qualify to use a reverse mortgage to purchase a home if you are 62 or older and plan to live in the property as your primary residence. The program was designed to allow seniors to purchase a new primary residence and obtain a reverse mortgage within a single transaction. The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs.

There’s a lot of information and misinformation available out there on reverse mortgages. Please feel free to call me (Laurie) or e-mail if you want the straight scoop about an Oregon reverse mortgage and whether or not it may be right for you. (Note: This was prepared by Laurie Willis, Senior Mortgage Advisor with Alpine Mortgage Planning in Eugene. She is very knowledgeable in Reverse Mortgages and I (Fred) work with her exclusively on a reverse mortgages. It is always best to have the best, especially in something as controversial and having so much misinformation about it as an Oregon reverse mortgage. You can reach Laurie directly at 541-342-7576.)

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