What is a Reverse Mortgage
Reverse mortgages (also referred to as Home Equity Conversion Mortgages, abbreviated to HECM) are assisting older residents in Lake Oswego Oregon attain greater personal financial stability and enjoy their retirement living years to the fullest extent.
The HECM FHA insured reverse mortgage could be used by senior home-owners age 62 and older to transform the home equity in their house to a monthly flow of extra cashflow and/or a credit line to be repaid once they no longer inhabit the house.
The mortgage loan, often called HECM, is funded by a mortgage company such as a mortgage lender, bank, credit union or savings and loan association. To assist the home-owner in making a well informed decision of if this program fulfills their needs, they’re required to get consumer education and counseling using a HUD-approved HECM counselor.
HECM counselors will discuss program qualification conditions, financial consequences and alternatives to receiving a HECM and provisions for the home loan becoming due and payable. Upon the conclusion of HECM counseling, the homeowner should be able to make an independent, well informed decision of whether the product will satisfy their requirements.
Lake Oswego homeowners who satisfy the eligibility requirements can complete a reverse mortgage application by contacting a FHA-approved lending institution like a bank, mortgage company, or savings and loan association.
Borrower Specifications For Getting A Reverse Mortgage Loan In Lake Oswego OR:
- Age 62 years old or older
- Own your home and also have significant equity
- Live in your home as a principal residence
- Participation in a consumer information session provided by an approved HECM counselor
Mortgage Amount Based On:
Age of the youngest borrower
Current interest rates
Lesser of appraisal value or the FHA insurance limit
Financial Requirements:
Income and credit requirements will be required of the applicant
No repayment providing the home is the primary residence
Closing costs may be financed in the mortgage
Property Requirements:
Single family house or 1-4 unit home with one unit occupied by the homeowner
HUD-approved condos
Manufactured houses on land
Meet FHA property standards and flood requirements
How the Home Equity Conversion Mortgage Program Works For Lake Oswego Homeowners
Property owners 62 and older which have paid in full their mortgages or have only small loan amounts outstanding, and are also currently living in the property are eligible to participate in HUD’s reverse mortgage program.
The loan enables home owners to borrow on the equity in their houses. Homeowners can select 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 payments for as long as the borrower remains in the home.
Modified Term – combination of credit line with monthly payments 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 can vary based upon Loan provider.
In contrast to ordinary home equity loans, a HUD reverse mortgage does not need repayment provided the home is the borrower’s primary residence. Mortgage lenders regain their principal, plus interest, once the house is sold. The remaining value of the home would go to the homeowner or to their heirs. You can’t ever owe more than your home’s appraisal value.
If the sales funds are inadequate to repay the amount payable, HUD will pay the mortgage lender 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 great thing about the HUD�”� FHA guarantee.
The total amount a homeowner may borrow will depend on their age, current interest rate, other loan costs and the appraised value of their property or FHA ‘s mortgage limits for their area, whichever is less. Normally, the more valuable your property is, the older that you are, the lower the rate, the more you could borrow.
There are no asset or income limitations on borrowers receiving HUD’s reverse home loan.
There are also no limitations on the value of houses getting qualified for a HUD reverse mortgage. The value of the home is determined by an appraisal. Nonetheless, the total that could 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 which is 2 percent of the maximum claim amount that could be borrowed plus a .5% annual premium.