HECM in Portland OR – Home Equity Conversion Mortgage
What You Must Be Aware Of Regarding Obtaining A HECM in Portland Including, Options, Costs, Requirements and Obtaining The Best Deal
The HECM program enables elderly homeowners in Portland Oregon to take out some of the equity in their home in the form of monthly payments for life or a fixed term, or in a lump sum, or through a line of credit. This reverse mortgage program allows families to stay in their home while using a portion of its equity. The total income that an owner can receive through the program is the maximum claim amount, which is calculated with a formula including the age of the owner, the interest rate, and the value of the home. The borrower remains the owner of the home and may sell it and move anytime, keeping the sales proceeds that exceed the mortgage balance. No repayment is required until the borrower moves, sells, or dies.
How the HECM Program Works in Portland OR
There are plenty of factors to consider before determining if obtaining a HECM loan in Portland meets your needs. To help in this process, you must meet with a HECM counselor to talk about program eligibility standards, financial implications and alternatives to getting a HECM reverse mortgage in Portland and repaying the loan. Counselors will also talk about provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you will be able to make a completely independent, informed decision of whether the hecm will meet your particular needs. You can look online for a HECM counselor or call (800) 569-4287 toll-free.
There are borrower and Portland property eligibility requirements that must be met. You may use the listing below to determine if you qualify. If you meet the eligibility criteria, you can complete a reverse mortgage application by contacting an FHA-approved lender. You can search online for a FHA-approved lender or you can request the HECM counselor to provide you with a list. The mortgage lender will talk about other guidelines of the HECM program, for instance initial year payment limitations, available payment options, the loan approval process, and repayment terms.
HECM Borrower Requirements Living in Portland OR
You must:
- Be 62 years old or older
- Own the home outright or paid-down a large amount
- Occupy the home as your principal residence
- Not be delinquent on any federal debt
- Have financial resources to continue to make timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
- Take part in a consumer information session given by a HUD- approved HECM counselor
Portland Property Requirements with the HECM
The following eligible property types in Portland will need to meet all FHA property standards and flood requirements:
Single family home or 2-4 unit home with one unit occupied by the borrower
HUD-approved condo project
Manufactured home that meets FHA requirements
HECM Financial Requirements of Borrowers in Portland OR
Income, assets, monthly living expenses, and personal credit history are going to be verified.
Timely payment of real estate taxes, hazard and flood insurance premiums will be confirmed
For adjustable interest rate mortgages, you’re able to select one of the following payment plans:
Tenure – equal monthly payments as long as at least one borrower lives and continues to occupy the property as a primary residence.
Term – equal monthly payments for a fixed period of months selected.
Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing up until line of credit is depleted.
Modified Tenure – combination of line of credit and scheduled monthly payments as long as you live in the home.
Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
For fixed interest rate HECM, you will receive the Single Disbursement Lump Sum payment plan.
HECM Mortgage Amounts Are Based On the Following
The amount you may borrow is determined by:
Age of the youngest borrower or eligible non-borrowing spouse
Current interest rates; and
Lesser of:
appraised value;
the HECM FHA mortgage limit of $679,650; or
the sales price (only applicable to HECM for Purchase)
When there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower is used to determine the amount you can borrow.
HECM Loan Costs
You can pay for most of the costs of a Portland HECM by financing them and having them paid from your proceeds of the loan. Financing the costs means you don’t need to to pay for them out of your pocket. Conversely, financing the fees reduces the net loan amount available to you.
The HECM loan includes several fees and charges, which include: 1) mortgage insurance premiums (initial and annual) 2) third party charges 3) origination fee 4) interest and 5) servicing fees. The lender will discuss which fees and charges are mandatory.
You will be charged an initial mortgage insurance premium (MIP) at closing. The initial MIP will be 2%. Over the life of the loan, you will be charged an annual MIP that equals 0.5% of the outstanding mortgage balance.
Mortgage Insurance Premium
You will incur a cost for FHA mortgage insurance. The mortgage insurance guarantees that you’re going to receive expected loan advances. You can finance the mortgage insurance premium (MIP) as part of your loan.
Third Party Charges
Closing costs from third parties can include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks and other fees.
Origination Fee
You will pay an origination fee to compensate the mortgage lender for processing your HECM loan. A lender may charge the greater of $2,500 or 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.
Servicing Fee
Lenders in Portland or their agents provide servicing throughout the life of the HECM. Servicing includes sending you account statements, disbursing loan proceeds and making sure that you keep up with loan guidelines which include paying property taxes and hazard insurance premium. Lenders may charge a monthly servicing fee of no more than $30 if the loan has an annually adjusting interest rate or has a fixed interest rate. The lender may charge a monthly servicing fee of no more than $35 if the interest rate adjusts monthly. At loan closing, the lender sets aside the servicing fee and deducts the fee from your available funds. Each month the monthly servicing fee is added to your loan balance. Reverse mortgage lenders may also choose to include the servicing fee in the mortgage interest rate.
Shopping for a Home Equity Conversion Mortgage in Portland OR
If you’re planning on getting a HECM in Portland, shop around. Choose which type of reverse mortgage loan may be right for you. That could be determined by what you would like to do with the money. Do a comparison of the options, terms, and fees from various HECM lenders in Portland. Learn as much as you are able to about reverse mortgages before you speak to a counselor or mortgage lender. And ask lots of questions to make sure a HECM could work for you – and that you’re getting the right kind for you.
Here are some things to consider:
Are you interested in a HECM loan to pay for home repairs or property taxes? If you do, determine whether you are a candidate for any low or no cost loans in your Portland. Staff at the Portland Area Agency on Aging may know about the programs in your Portland. Look for the nearest agency on aging at eldercare.gov, or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and ways to apply.
Do you live in a higher-valued house? You may be capable of borrow more money using a proprietary reverse mortgage. But the more you borrow, the bigger the fees you’ll pay. In addition, you might take into consideration a HECM loan. A HECM counselor or a lender in Portland can help you compare these sorts of loans side-by-side, to determine what you will get – and what it costs.
Compare fees and rates. This bears repeating: research prices and compare the costs of the HECM loans available to you in Portland. Although the mortgage insurance premium is normally the same between various lenders, the majority of loan costs – including origination fees, interest rates, closing costs, and servicing fees – fluctuate between loan providers.
Understand total costs and loan repayment. Ask a counselor or lender to explain the Total Annual Loan Cost (TALC) rates: they show the estimated annual average cost of a HECM, including all the itemized costs. And, regardless of what type of HECM you’re thinking of in Portland, recognize all the reasons why your loan might have to be repaid prior to were planning on it.
What You Need To Know About HECM Loans in Portland Oregon
If you get a HECM of any type, you get a loan in which you borrow from the equity in your house. You retain the title to your home. Rather than pay monthly mortgage payments, though, you get an advance on part of your home equity. The cash you obtain usually is not taxable, and it usually won’t affect your Social Security or Medicare benefits. Once the final surviving borrower dies, sells the home, or no longer resides in the house as a primary residence, the HECM has to be repaid. In certain situations, a non-borrowing spouse may be able to stay in the home. Here are some items to consider about home equity conversion mortgages in Portland OR:
You owe more over time. As you obtain money using your home equity conversion mortgage, interest is added onto the total amount you owe each month. This means the amount you owe increases as the interest on your loan accumulates over time.
Interest rates might change over time. Nearly all HECM’s have variable interest rates, that are tied to a financial index and adjust with the market. Variable rate loans usually present you with more choices on how you get your money through the HECM loan. Several reverse mortgages – mostly HECMs – offer fixed interest rates, but they tend to demand that you take your loan as a lump sum at closing. Often, the amount you can borrow is less than you have access to with a variable interest rate loan.
Interest is not tax deductible each year. Interest on reverse mortgages is not deductible on tax returns – until the loan is paid off, either partially or in full.
You must pay other costs connected with your home. In a HECM, you retain the title to your
Portland home. That means you are responsible for property taxes, insurance, utilities, fuel, maintenance, in addition to other expenses. And, if you don’t pay your property taxes, keep homeowner’s insurance, or maintain the home, the lender might require you to repay your loan. A financial assessment is required when you apply for the mortgage. As a result, your lender might demand a “set-aside” amount to pay your taxes and insurance during the loan. The “set-aside” reduces the amount of funds you can get in payments. You are still responsible for maintaining your home.
What happens to your spouse? With HECM loans, if you signed the loan paperwork and your spouse didn’t, in a few instances, your spouse may continue to reside in the home even after you pass away if he or she pays taxes and insurance, and continues to maintain the property. But your spouse will stop getting money from the HECM, since he or she wasn’t a part of the loan agreement.
What can you leave to your heirs? HECM’s can use up the equity in your home, which implies fewer assets for you and your heirs. Most reverse mortgages have something called a “non-recourse” clause. This means that you, or your estate, can’t owe more than the value of your home when the loan becomes due and the home is sold. With a HECM, generally, if you or your heirs choose to pay off the loan and keep the home rather than sell it, you wouldn’t have to pay more than the appraised value of the home.
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