Is a Reverse Mortgage right for you?

Over the weekend I attended my little brothers graduation from OSU. Great event and its always fun to get the family together to celebrate and catch up.

While at the family party, my 85 year old grandfather asked me about Reverse Mortgages.

I told him that there is great benefits to seniors, but to be careful because they may not be right for everyone. I came home and decided I should list 10 ways to know if a Reverse Mortgage is right for you.

The following tips can help you understand the ins and outs of reverse mortgages, either for yourself or for an aging parent or relative who could use a financial boost.

10 Tips: How seniors can benefit from a Reverse Mortgage

1. Age matters. For most reverse mortgages, a borrower must be at least 62 and must live in the home as a principal residence. Generally, the older you are and the more valuable your home is, the more money you can tap.

2. Learn how the loans work. Most reverse mortgages require no repayment as long as you live in your home. The loan must be repaid in full, along with interest, when the last living borrower no longer occupies the home as their primary residence.

3. Understand the lender’s role. A lender – typically a bank – will provide you with a loan in an amount ranging from 20 percent to 60 percent of your home’s equity. In exchange, the lender will receive a portion of your home’s value when you die or sell the home.

4. Choose a payment preference. The loan can be paid to you in three ways: as a lump sum, in regular monthly or quarterly installments, or as a line of credit you can tap as needed.

5. Know your responsibilities. Borrowers are responsible for property taxes, insurance and home repairs. Your loan could become due and payable in full if you fail to meet those responsibilities.

6. Get free help. If you are ready to look into a Reverse Mortgage for you situation, know that help is out there. I can give you advice and show you several scenarios. Free of charge. Also know such help is available at little or no cost from the U.S. Department of Housing and Urban Development or a HUD-approved housing counseling agency. Call HUD’s toll-free Housing Counseling and Referral Line at 1-800-569-4287 for details.


7. Assess your status. If you own your home outright or nearly so, a reverse mortgage can help you financially at a point in your life when you may really need it – or at a point when you may really want to take that trip around the world or pursue another lifelong dream. But if you still owe quite a bit of mortgage principal, you’ll usually have to pay that off first. (You can do that via a lump-sum advance on your reverse mortgage, which may or may not make financial sense for you depending on your circumstances.)

8. Assess neighborhood real estate prices. Over time, a reverse mortgage depletes your homes equity. But if you live in an area where home prices have a history of rising, your home’s equity could continue to go up despite your reverse mortgage.

9. Consider your options. A Home Equity Conversion Mortgage is insured by the federal government, and the money you borrow can be used for any purpose. As you investigate loans, clarify exactly what the fees will be. They can vary wildly – from as low as 2 percent of the loan amount to as high as 7 percent. Sometimes to secure a lower fee, you may opt for a higher interest rate, so remember to take that detail into consideration and do the math carefully as you shop around. I will show you a break down of every scenario you qualify for and explain this in detail.

10. Inform yourself. Please feel free to call me anytime for a free brochure or complimentary DVD on the advantages of a Reverse Mortgage. Call toll free to 1-800-921-2636 or in Portland call 503-594-1144.