Reverse Mortgage – How Much Can You Borrow?

What kind of money am I going to get with a reverse mortgage, and what are my payment options if I live in Portland Oregon?

Answer:

This will depend on the type of mortgage, the mortgage company you choose, and the payment option that you pick.

Most reverse mortgages today are Home Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures HECMs. With a HECM loan, you can receive your cash in one of three ways: as a credit line, in monthly installments, or a lump sum payment. You can also get a combination of monthly payments and a line of credit.

Note: This webpage has information about HECMs, which are the most common type of reverse mortgage.

To obtain a HECM reverse mortgage your Portland loan provider will calculate how much you are approved to borrow overall based upon your age, the interest rates, along with the lesser of the appraisal value of your property or the maximum claim amount. This number is known as your initial principal limit. When you are borrowing with someone else or have a non-borrowing spouse, the principal limit is dependent on the age of the youngest co-borrower or eligible non-borrowing spouse.

In general, it is possible to take out up to 60 % of your principal limit during the 1st year. Having said that, in the event the amount you owe on an existing mortgage (as well as other required payments) is more than 60 % of your principal limit, it’s possible to get enough to pay back your mortgage (and any other required payments, including initial loan fees) plus additional funds of up to 10 % of your principal limit. We refer to these amounts as the first-year draw limit.

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