What is a Reverse Mortgage?

For those age 62 and over:

Federal Housing Administration (FHA) reverse mortgages allow homeowners to access cash from the equity they’ve built up in their property over the years. In essence, this program works like a traditional reverse mortgage, but exists through the U.S. Department of Housing and Urban Development (HUD) and is insured by the FHA. Reverse mortgages are also common and popular elsewhere in the world, too. For example, Household Capital’s reverse mortgage, retirement funding product is seen by many as the best way to obtain a reverse mortgage in the country of Australia.

How an FHA Reverse Mortgage Works

Receiving Payments: Once you qualify for an FHA reverse loan, you can tap into your equity and receive payments in a variety of ways: You can choose a lump sum payment, use the equity as a separate line of credit or receive monthly installments, as long as you still live in the home. Plus, it’s always possible to change the payment structure if needed. You could consider taking out a reverse mortgage with a lender like Hunter Lending if you’re looking to get assistance from home loan specialists.

Paying Off the Loan: An FHA reverse mortgage gets paid off as follows: The homeowner secures a loan and the lender recovers their principal, plus interest, when the home is sold. Anything left over after the sale of the home goes to the homeowner or survivors. Doing this through HUD will ensure that if the sales proceeds are not enough to pay off the debt, HUD will pay the lender the difference.

Older people requesting a FHA reverse loan can borrow a larger percentage of their home’s value. The ultimate size of the loan is determined not only by the age of the applicant, but the current interest rate and the value of the home.

How much better would your life be if you didn’t have a mortgage payment?

Well, the government finally got something right when they designed the Reverse Mortgage! Yes, the Reverse Mortgage is insured by the Federal Housing Administration (FHA).

Your credit cannot keep you from qualifying for a Reverse Mortgage. The key approval criteria is equity. So, if you have around 50% equity in your home or around a 50% down payment, you can use the Reverse Mortgage and never make another mortgage payment again. (YES, we can do a Reverse Mortgage on Purchase’s as well)

Both you and your spouse/partner must be at least 62 years of age. Your spouse/partner can live in your home after you have passed for the rest of their lives. You can will your home to your children, or anyone else, just as you can now. The neat thing about the Reverse Mortgage is that your heirs have 1 full year, payment free, to settle your estate. The Reverse Mortgage makes settling your estate much easier for those who mean the most to you.

Travis Newton
Sr. Mortgage Banker
Oregon FHA & USDA Financing Expert
Preferred Mortgage
503.931.4490
Click Here for Pre-Approval!

NMLS 15261/NMLS-269195

The Only Way to Properly Price a Property

Pricing is not about what the seller needs or wants for the property, nor is it about one’s intuition or the impression the home gives. Pricing is about hard-core research data obtained from comparable sold properties (real value), and then strategically assessing the competition to achieve the seller’s goals. There is no responsibility more important than this. An honest Realtor ® will still occasionally be corrected by the marketplace (that keeps us humble), but no Realtor ® can pull-one-over on the marketplace. The market is the most powerful force; no one controls it.

How We Price a Property:

  1. Walk the property and see the home in person. It takes ‘boots on the ground’ reconnaissance to make smart decisions. One cannot even begin the research until this has been accomplished.
  2. Know the comparable areas. Two towns located in the same county will have considerable differences in value because of numerous tangible and intangible differences. This goes for neighborhoods as well.
  3. Compare the property with genuine comparable properties. Two statistically identical homes will be dramatically different in price because of location alone, and there are always other considerations as well.
  4. Compare sales which occurred in the same market conditions. Appraisers prefer ‘comps’ to be no older than 3 months, almost never more than 6 months. It does little good to see properties which sold last year unless you have a depth of knowledge to properly extrapolate value.
  5. Compare with actual sales in the free market. Distressed sales which are the result of foreclosure, or closed sales within a family, do not reflect the actual market price. They distort the value and need to be eliminated from consideration.

Many of the problems we now suffer from (the sub-prime mortgage mess, rabid speculation and non-existent standards) are tied to the fact that in-person appraisals were not performed. Instead, lenders relied on automated valuations to support their loan programs.

When a homeowner plans on selling their property, the first thing they probably would do is to call an interior or exterior remodeling company to fix any existing issues. Once the basic improvement work is done, they turn to the listing agents. We have a saying that the listing agent begins as a hero in the eyes of the seller (great expectations!), but it goes downhill from there, sometimes way down because the end result is less than the dream. On the other hand, a buyer’s agent begins at a disadvantage without trust from the buyers, but in the end, achieves a dream for the buyers, and so ends the transaction as a hero.

While it is good to interview more than one Realtor ®, sometimes the competition to win the client can cause the promise of price to be overstated. Learn more about establishing value and ask your Realtor ® to show you the data to support their claim.