What is a reverse mortgage?  Simply a way for those 62 years of age and older, to tap into existing equity in a home to purchase a primary residence!  Reverse mortgages got a “bad rap” in the ’60s, as the original incarnation involved the bank actually taking title to your home.  In the ’80s, FHA (Federal Housing Administration) got involved and started revising this mortgage instrument.  A reverse mortgage or HECM (Home Equity Conversion Mortgage) is an FHA-insured reverse mortgage which enables home buyers, 62 years or older, to purchase a primary residence and obtain a reverse mortgage in simultaneous transaction with no monthly mortgage payments.  It also allow these buyers to combine reverse mortgage proceeds with a down payment from their current home sale or other assets, to purchase a new home. 

• There is no income, health or credit score qualification
• There are “purchase and “refinance” options
• Must be a primary residence
• Down-payment is based on age, interest rate and home value
• Interest is added to the balance and the borrower gets the principal payment

So, a reverse mortgage is really just a negative amortization loan.  The maximum loan amount, at least through 2009, is $625,500.  But, the buyer can pay the difference is they purchase a more expensive property.  There is a 2% origination fee on the first $200k and 1% on anything above that. 

Eligible properties include:

• HUD approved condos
• Single family
• Owner-occupied, 1-4 units
• Manufactured homes built after 06/15/1976

Not Eligible:

• Bed & Breakfast
• Co-ops
• 2nd home
• Manufactured homes built before 06/15/1976

This is just another tool available to buy and sell homes in the Portland Oregon real estate market.  If you need more info for yourself or a family member, do call or write and I’ll refer you to some loan officers familiar with the process!