Reverse Mortgage Programs
Reverse Mortgage Programs are a special type of financing which enables senior homeowners to use their home equity to fulfill financial needs.
What is the Home Equity Conversion Mortgage (HECM) and the Home Keeper Mortgage?
Both of these are Reverse Mortgage Programs. Funds from both programs can be used for any purpose (including buying a new home with the Home Keeper program). Both are adjustable-rate loans. Interest rates adjust either monthly or annually and have lifetime interest rate caps that vary depending on the program you choose. All the proceeds from both reverse mortgage programs are tax-free.
The difference between the two programs is that the HECM is a FHA-insured reverse mortgage program. The Home Keeper Mortgage is Fannie Mae’s proprietary reverse mortgage program.
Unlike traditional home equity financing, there are no income, medical, or credit score restrictions with either reverse mortgage program. In addition you will:
- Never make a monthly mortgage payment
- Never give up title or ownership of the home
- Never owe more than the value of the home
- Never have any restrictions on how the tax-free proceeds are used
- Never have Social Security or Medicare benefits affected
Who is eligible for a reverse mortgage?
To apply for a Reverse Mortgage, you must be 62 years of age or older and occupy your home as your primary residence. You must own your home free and clear or have a low remaining mortgage balance which can be paid off with your reverse mortgage proceeds. You also must agree to attend a free reverse mortgage counseling session from a HUD-approved counselor. Friends, family members, or financial advisors are welcome to attend with you.
How can I receive my reverse mortgage proceeds?
Customers may choose:
- A Lump Sum. This can be used to pay off debt, make home repairs or to cover any large expense.
- Monthly Allotments. These funds can be used to supplement income.
- A Line of Credit. You can access your funds as needed.
- Combine Your Options. If you do not take the entire amount as an up-front lump sum, you may be able to arrange a combination of options, if it better suits your needs. Plus, you can change your payment options as often as you wish.
- A Term Plan. You receive monthly allotments for a set period of time. Allotments are determined by dividing loan proceeds by the number of months in the set period.
- A Tenure Plan. You receive monthly allotments for as long as you live in the home.
What if I Use All of the Available Proceeds?
This can happen if you choose a Term Plan, or if unexpected expenses arise. But, no matter which plan you choose, and no matter if or when you receive all your loan proceeds, you can still stay in your home without any repayment as long as it remains your primary residence.
How much can I receive from a reverse mortgage?
The maximum loan amount for a reverse mortgage is based primarily on three factors.
- The age of the youngest borrower
- The value of the home
- The current interest rate
To estimate the amount you could receive from a reverse mortgage, please contact us at 503-768-4808.
Are there fees?
Besides interest, getting a reverse mortgage typically involves a few types of fees including:
- An origination fee
- Third-party closing costs
- A monthly servicing fee
You can generally finance these costs as part of your loan by having them deducted from the available loan amount.
What if my repayment balance exceeds the value of my home?
This can happen. But even if it does, you or your heirs will never owe more than the sale price of your home. Your mortgage insurance covers any further obligation to the lender.
You can still stay in your home without any repayment as long as it remains your primary residence.
When does the loan become due and payable?
When you sell your home or no longer use it for your primary residence, you or your estate will repay the loan proceeds, plus interest and other fees, to the lender. Your heirs will be able to choose whether to keep the home or sell it. If they decide to keep the home, they must pay the balance due on the reverse mortgage. Otherwise, they may sell the home and use the proceeds to pay off the loan balance. They can keep any excess proceeds from the sale of the home. The remaining equity in your home, if any, belongs to you or to your heirs.
Did we answer all of your questions?
We know this a complicated decision and cannot be made without your questions answered in full. Call us today at 503-768-4808 and we will provide immediate answers to your questions. Plus, we will send you a complete information packet in the mail.
Want to find out how to QUALIFY?
Are you 62 years of age or older?
Do you live in the home for which you are making the inquiry?
If the answer is yes to both of these questions