HECM in Springfield OR – Home Equity Conversion Mortgage
What You Need To Be Aware Of Regarding Obtaining A HECM in Springfield Including, Options, Costs, Requirements and Receiving The Best Deal
The HECM program makes it possible for elderly homeowners in Springfield Oregon to withdraw a portion of the equity of their home in the form of monthly payments for life or a fixed term, or in a lump sum, or through a credit line. This reverse mortgage loan program allows families to stay in their home while using some of its equity. The total income that an owner can receive from the program is the maximum claim amount, which is calculated with a formula including the age of the owner, the interest rate, and the value of the home. The borrower continues to be the owner of the home and may sell it and move anytime, keeping the sales proceeds that exceed the mortgage balance. No repayment is necessary until the borrower moves, sells, or dies.
How the HECM Program Works in Springfield OR
There are several things to consider before determining if receiving a HECM loan in Springfield is right for you. To help in this process, you will need to meet with a HECM counselor to go over program eligibility standards, financial implications and alternatives to receiving a HECM reverse mortgage in Springfield and repaying the loan. Counselors will talk about provisions for the mortgage becoming due and payable. Upon the conclusion of HECM counseling, you should be able to make an independent, informed decision of whether the product will meet your specific needs. You can look online for a HECM counselor or call (800) 569-4287 toll-free.
There are borrower and Springfield property eligibility requirements that must be met. You can use the list below to determine if you qualify. Should you meet the eligibility criteria, you can complete a reverse mortgage application by contacting a FHA-approved lender. You can look online for a FHA-approved lender or ask the HECM counselor to provide you with a list. The loan originator will talk about other qualifications of the HECM program, for instance initial year payment limitations, available payment options, the loan approval process, and repayment terms.
HECM Borrower Requirements Living in Springfield OR
You must:
- Be 62 years old or older
- Own the house outright or paid-down a considerable amount
- Occupy the home as your principal residence
- Not be delinquent on any federal debt
- Have financial resources to continue for making timely payment of ongoing property charges such as property taxes, insurance and Homeowner Association fees, etc.
- Take part in a consumer information session given by a HUD- approved HECM counselor
Springfield Property Requirements with the HECM
The following eligible property types in Springfield will need to meet all FHA property standards and flood requirements:
Single family home or 2-4 unit home with one unit occupied by the borrower
HUD-approved condominium project
Manufactured home that meets FHA requirements
HECM Financial Requirements of Borrowers in Springfield OR
Income, assets, monthly living expenses, and credit rating are going to be verified.
Timely payment of real estate taxes, hazard and flood insurance premiums are going to be verified
For adjustable interest rate mortgages, you are able to select one of the following payment plans:
Tenure – equal monthly payments so long as at least one borrower lives and continues to inhabit the property as a primary residence.
Term – equal monthly payments for a fixed period of months selected.
Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing up until the line of credit is depleted.
Modified Tenure – combination of line of credit and scheduled monthly payments so long as you remain in the home.
Modified Term – combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.
For fixed interest rate HECM, you will receive the Single Disbursement Lump Sum payment plan.
HECM Mortgage Amounts Are Based On the Following
The amount you may borrow would depend on:
Age of the youngest borrower or eligible non-borrowing spouse
Current interest rates; and
Lesser of:
appraised value;
the HECM FHA mortgage limit of $679,650; or
the sales price (only applicable to HECM for Purchase)
Should there be more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower must be used to determine the amount you are able to borrow.
HECM Loan Costs
You can pay for almost all costs of a Springfield HECM by financing them and having them paid from your proceeds of the loan. Financing the fees means that you don’t have to pay for them out of your pocket. However, financing the fees reduces the net loan amount available to you.
The HECM loan includes several fees and charges, which includes: 1) mortgage insurance premiums (initial and annual) 2) third party charges 3) origination fee 4) interest and 5) servicing fees. The lender will discuss which fees and charges are mandatory.
You will be charged an initial mortgage insurance premium (MIP) at closing. The initial MIP will be 2%. Over the life of the loan, you will be charged an annual MIP that equals 0.5% of the outstanding mortgage balance.
Mortgage Insurance Premium
You will incur a cost for FHA mortgage insurance. The mortgage insurance guarantees that you will receive expected loan advances. You can finance the mortgage insurance premium (MIP) as part of your loan.
Third Party Charges
Closing costs from third parties can include an appraisal, title search and insurance, surveys, inspections, recording fees, mortgage taxes, credit checks and other fees.
Origination Fee
You will pay an origination fee to pay the loan originator for processing your HECM loan. A lender can charge the greater of $2,500 or 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.
Servicing Fee
Mortgage lenders in Springfield or their agents provide servicing throughout the life of the HECM. Servicing consists of sending you account statements, disbursing loan proceeds and ensuring that you satisfy loan guidelines including paying real estate taxes and hazard insurance premium. Lenders may charge a monthly servicing fee of no more than $30 if the loan has an annually adjusting interest rate or has a fixed interest rate. The lender may charge a monthly servicing fee of no more than $35 if the interest rate adjusts monthly. At loan closing, the lender sets aside the servicing fee and deducts the fee from your available funds. Each month the monthly servicing fee is added to your loan balance. Lenders may also choose to include the servicing fee in the mortgage interest rate.
Shopping for a Home Equity Conversion Mortgage in Springfield OR
If you’re considering getting a HECM in Springfield, shop around. Decide which type of reverse mortgage might be right for you. That might depend on what you would like to do with the cash. Do a comparison of the options, terms, and fees from various HECM lenders in Springfield. Learn as much as you are able to about reverse mortgages before you speak to a counselor or loan provider. And ask lots of questions to make sure a HECM could work for you – and that you’re getting the right kind for you.
Here are some things to consider:
Are you interested in a HECM loan to pay for home repairs or property taxes? If you do, determine whether you qualify for any low-cost single purpose loans in your Springfield. Staff at the Springfield Area Agency on Aging may know about the programs in your Springfield. Look for the closest agency on aging at eldercare.gov, or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and how to apply.
Are you living in a higher-valued property? You may be qualified to borrow more money with a proprietary reverse mortgage. But the more you borrow, the higher the fees you’ll pay. You also might think about a HECM loan. A HECM counselor or a lender in Springfield can assist you evaluate these sorts of loans side-by-side, to see what you will get – along with what it costs.
Look at fees and costs. This bears repeating: check around and look at the costs of the HECM loans available to you in Springfield. Although the mortgage insurance premium is normally the same from lender to lender, the majority of loan costs – including origination fees, interest rates, closing costs, and servicing fees – can vary between loan companies.
Understand total costs and loan repayment. Ask a counselor or lender to explain the Total Annual Loan Cost (TALC) rates: they reveal the estimated annual average cost of a HECM, which include all the itemized costs. And, regardless of what kind of HECM you’re thinking about in Springfield, recognize all the reasons why your loan may need to be repaid prior to were planning on it.
What You Need To Know About HECM Loans in Springfield Oregon
If you get a HECM of any type, you get a loan in which you borrow from the equity in your home. You retain the title to your home. Rather than paying monthly home loan payments, though, you receive an advance on part of your home equity. The money you obtain usually is not taxable, and it normally won’t affect your Social Security or Medicare benefits. Once the last surviving borrower dies, sells the home, or no longer resides in the home as a principal residence, the loan must be repaid. In certain situations, a non-borrowing spouse may be able to remain in the home. Here are some things to consider about home equity conversion mortgages in Springfield OR:
You owe more over time. As you borrow money using your home equity conversion mortgage, interest is added onto the total amount you owe each month. That means the amount you owe gets bigger as the interest on your loan adds up over time.
Interest rates can change over time. Most HECM’s have variable interest rates, which are linked with a financial index and change with the market. Variable rate loans normally present you with additional options on how you get your money through the HECM loan. Several reverse mortgages – mostly HECMs – offer fixed interest rates, but they generally require you to take your loan as a lump sum at closing. Typically, the total amount you can borrow is lower than you can get with a variable rate loan.
Interest isn’t tax deductible every year. Interest on reverse mortgages is not deductible on tax returns – until the loan is paid off, either partially or in full.
You have to pay other costs in connection with your home. In a HECM, you keep the title to your
Springfield home. That means you are responsible for property taxes, insurance, utilities, fuel, maintenance, in addition to other expenses. And, if you don’t pay your property taxes, keep homeowner’s insurance, or maintain your home, the lender might require you to repay your loan. A financial assessment is required when you apply for the mortgage. As a result, your lender might demand a “set-aside” amount to pay your taxes and insurance during the loan. The “set-aside” reduces the amount of funds you can get in payments. You are still responsible for maintaining your home.
What happens to your spouse? With HECM loans, if you signed the loan paperwork and your spouse didn’t, in certain situations, your spouse may continue to live in the home even after you pass on if he or she pays taxes and insurance, and continues to maintain the property. But your spouse will stop receiving money from the HECM, since he or she wasn’t part of the loan agreement.
What can you leave to your heirs? HECM’s can use up the equity in your home, which means fewer assets for you and your heirs. Most reverse mortgages have something called a “non-recourse” clause. This means that you, or your estate, can not owe more than the value of your home when the loan becomes due and the home is sold. With a HECM, generally, if you or your heirs choose to pay off the loan and retain the home rather than sell it, you wouldn’t have to pay more than the appraised value of the home.
[hide][ssvideo keyword=”what is a hecm” title=””][/hide]
[hide][ssplaces location=”Springfield OR” keyword=”loans” limit=”10″][/hide]
[hide][ssvideo keyword=”home equity conversion mortgage” title=””][/hide]