Questions

What Happens If I Move Out

December 7, 2018 /

What happens if I have to move out of my Portland property into a nursing home, or to live with family, and I have a reverse mortgage?

Answer:

When you have a reverse mortgage and you no longer live in your Portland Oregon property for a majority of the year, or you have to leave your property for health-related factors for in excess of 12 sequential months, you may have to pay off the reverse mortgage loan, which may result in selling your property in Portland OR

The vast majority of reverse mortgages funded in Portland are Property Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a division of Department of Housing and Urban Development (HUD), insures HECMs. A HECM loan will need to be paid off fully after the last surviving borrower or eligible non-borrowing partner passes away or completely moves out of the house.

Any situation in which you have resided some other place for the majority of the year, or for more than 12 continuous months for health related causes – including a elderly care facility or assisted living – will count as a “permanent move.”

So what would this mean in practice? Use this list to look up your circumstances:

When you’re the only borrower on the HECM and:

  • You are living on your own in Portland Oregon, your loan will need to be paid off if you move some other place for the majority of the year, or to a elderly care or assisted living facility over 12 sequential months. This could involve selling your house to to pay off the mortgage.
  • You live with a spouse, the loan will need to be paid off if you move some other place for the most of the year, or to a elderly care facility or assisted living care facility facility in excess of 12 continuous months.

Caution: This will almost certainly require selling your home, and your partner will likely have to move.

You reside with children, other family or unrelated roommates, your mortgage loan will have to be paid off if you move someplace else for a majority of the year, or to a care home or assisted living care home for longer than 12 consecutive months.

Warning: This can require selling your property, and your children, relatives or roommates will probably need to move.

If you’re a co-borrower on the HECM reverse mortgage in Portland OR and:

  • You live on your own because your co-borrower has passed away or already lives somewhere else, your loan must be repaid if you move someplace else for a majority of the year, or to a elderly care facility or assisted living facility for longer than 12 consecutive months.
  • You live with a partner that is a co-borrower on the reverse mortgage, your co-borrower could reside in the house when you move some other place for a majority of the year, or to a elderly care facility or assisted living. But if your co-borrower has to move out too, either because he or she no longer lives in the house for the most of the year or for more than 12 consecutive months because of health reasons, your home loan will need to be paid back.
  • You reside with other family members or unrelated roommates. If the co-borrower still resides in the house, your other family or roommates may live there too after you move to a nursing home or assisted living facility. But, if the co-borrower also no longer lives in the home for the majority of the year or for over 12 continuous months due to health reasons, your loan will have to be paid off.

Caution: This will in all probability require selling the house, and your relatives or roommates will in all probability have to move.

Typically, co-borrowers are spouses or partners.

Co-borrowers are handled the exact same regardless of whether they are spouses, partners, relatives or just roommates.

The majority of borrowers in Portland OR will have to sell their home to be able to repay the reverse mortgage. With an FHA-insured HECM loan, if your loan balance is more than your house is appraised for, you don’t have to pay the excess. Once you sell the home, the lending company will take the proceeds from the sale as payment on the loan, and the FHA insurance will take care of any outstanding home loan balance.

If you would like to keep your home instead of selling it, the loan must be repaid with another source of funds. But you won’t have to pay more than the full loan balance or 95 percent of the home’s appraised value, whichever is less.

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