Manufactured Home Mortgages

What is a Reverse Mortgage?

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A Reverse Mortgage is a federally regulated program for homeowners, aged 62 and older.  It allows the equity in your home to pay you rather than you paying for your home.  There are a vast number of ways we can setup a Reverse Mortgage for you, from paying off your existing mortgage and providing you a credit line you can draw on at will, to setting up automatic payments TO YOU, or any combination of the above.  We can even do a Reverse Mortgage purchase loan.  And in all cases, you would have NO mortgage payments to pay for the rest of your life.  We offer Home Equity Conversion Mortgages (HECMs), which are federally insured by the Federal Housing Administration (FHA/HUD).  They are non-recourse loans, which means the lender can never force you or your heirs to pay back anything.  The ONLY action the lender can take to recoup the funds they have given you, is by foreclosing on the home.  The only time that would happen while you are living there is if you stopped paying the property taxes and insurance or if you allowed the property to get to a state of serious disrepair.  In all other cases, the mortgage isn't due until all borrowers (to include a non-borrowing spouse) either pass away or move out of the house for more than 12 months.  They are setup so there will likely be equity left in the home once this happens.  When the loan is called due for this reason, the property can be sold by the owners or the heirs and the proceeds from the sale can be retained, just like when selling any other home with a mortgage.  If the borrower lives long enough, it's possible they will owe more money than the home is worth when they pass away.  In this case the heirs would have two options: they could either simply let the lender take possession of the home and not worry about, or they could purchase the property from the lender for 95% of the market value.  Any potential losses that the lender would be facing in this case are insured by FHA, so it's a win-win for everyone.

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How is the HECM program safe for seniors?

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No matter what happens in the economy, how much money you receive, or how long you live in your home, you will never be required to make a mortgage payment.  In addition, no matter what happens to your lender or your home's value, you have guaranteed access to your money.

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Who owns the home if I go with a Reverse Mortgage?

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You own the home.  However, you pledge the home as collateral, just like a traditional mortgage.

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What happens if, in the future, the loan exceeds the value of the home?

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Your Reverse Mortgage will continue, thanks to the federal insurance.  The line of credit will still be available and monthly disbursements you may have setup will still be sent to you.

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How are Reverse Mortgages different today?

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Today's Reverse Mortgages are highly regulated by state and federal laws to make them safe and to protect you.  Among others, the following regulations apply:

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• You retain title of the home

• No equity share is allowed, meaning the lender does not slowly take over your home

• Fees and costs are federally regulated

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How does a reverse mortgage compare to a conventional mortgage?

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In a conventional forward mortgage, you make monthly payments to the bank, eventually paying off the mortgage over time.  With a reverse mortgage, you receive cash from your lender, as a lump sum up front, as monthly installments, or as a credit line that grows over time.  As long as you live in your home, you never have to pay off a single dollar of the loan.

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What restrictions apply to the cash I receive from a Reverse Mortgage?

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It is your money and you can use it the way you want.  It's non-taxable and does not affect Social Security payments.  It is recommended that you talk to a competent financial advisor to determine the effect on any other benefits you may be receiving.

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When does a Reverse Mortgage become due and what happens then?

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When you no longer live in your home or when you pass away, the reverse mortgage becomes due.  You or your heirs have two options:

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1.  Pay off the reverse mortgage including the accrued interest and retain ownership

2.  Give up ownership of the home and receive the difference between the net sales proceeds and the loan balance.  You will not be liable for any shortfall if the sales proceeds do not cover the loan.

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Your loan may also become due and payable if you do not continue to meet the terms of the loan (for example, paying taxes and insurance owed on the property).

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What are my obligations under a Reverse Mortgage?

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With a Reverse Mortgage you retain title to your home.  This means that you also have all your obligations as a home owner.  You are responsible for paying the property taxes and homeowner's insurance.

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How does purchasing a home with a Reverse Mortgage work?

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Let's say you are 65  years old and recently retired.  Let's also say you have a $300,000 in liquid assets you could use to purchase a new home.  Perhaps some of those funds are from a retirement account and some are from the proceeds of the sale of another home.  Let's say your goal is to use these funds to purchase a home so that you don't have to worry about a mortgage payment for the rest of your life.  You could apply all $300,000 toward the purchase of a $300,000 home, in which case you don't have any mortgage payments, but you also don't have any liquid funds.  Alternatively, you could utilize a Reverse Mortgage and only put down about 50% of the purchase price.  This would allow you to purchase the home, never have to make a mortgage payment for the rest of your life, and still have $150,000 in the bank.  Another strategy would be to use the entire $300,000 toward the purchase of a new home, however with a reverse mortgage, you would have the purchasing power to get into a $600,000 home without ever having to worry about mortgage payments.

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How can I use a Reverse Mortgage to maximize my Social Security benefits?

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One function of a Reverse Mortgage is a term payment.  This is a set monthly payment that the lender will pay you every month for a predetermined amount of time.  Let's say you are 62 and you want to defer your Social Security benefits until you are 70 so that you receive a higher social security benefit.  You could potentially setup a term payment that will pay you every month for the next 8 years until you turn 70 and start pulling Social Security and the higher rate.  In that way you could maximize your Social Security benefits and supplement your income with a Reverse Mortgage in the interim, all while never having to worry about a mortgage payment.

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Interested in getting a Reverse Mortgage?

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Call us at 503-222-6404 and we can discuss your situation and find out if a Reverse Mortgage is right for you.

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