What You Need To Know About Obtaining A HECM in Eugene Including, Options, Costs, Requirements and Obtaining The Best Offer
The HECM program enables elderly homeowners in Eugene Oregon to pull out a portion of the equity in their home in the form of monthly payments for life or a fixed term, or in a lump sum, or through a line of credit. This reverse mortgage loan program allows families to stay in their home while using a portion of its equity. The total income that an owner will get through 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 needed up until the borrower moves, sells, or dies.
How the HECM Program Works in Eugene OR
There are several things to consider before determining if getting a HECM loan in Eugene is best for you. To assist in this process, you must meet with a HECM counselor to talk about program eligibility standards, financial implications and alternatives to obtaining a HECM reverse mortgage in Eugene and repaying the loan. Counselors will also go over provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you should be able to make a completely independent, informed decision of whether the hecm will meet your specific needs. You can look online for a HECM counselor or call (800) 569-4287 toll-free.
There are borrower and Eugene property eligibility requirements that must be met. You may use the listing below to see if you qualify. In the event you meet the eligibility criteria, you can complete a reverse mortgage application by contacting a FHA-approved lender. You can search online for a FHA-approved lender or request the HECM counselor to provide you a list. The loan originator will discuss other qualifications of the HECM program, such as first year payment limitations, available payment options, the loan approval process, and repayment terms.
HECM Borrower Requirements Living in Eugene
You must:
- Be 62 years old or older
- Own the property outright or paid-down a large amount
- Occupy the home as your principal residence
- Not be delinquent on any federal debt
- Have financial resources to continue to make 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
Eugene Property Requirements with the HECM
The following eligible property types in Eugene are required 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 satisfies FHA requirements
HECM Financial Requirements of Borrowers in Eugene OR
Income, assets, monthly living expenses, and personal credit history are going to be verified.
Timely payment of real estate taxes, hazard and flood insurance premiums will be confirmed
For adjustable interest rate mortgages, you’re 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 credit line is depleted.
- Modified Tenure – combination of line of credit and scheduled monthly payments for as 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 home loans, you will receive the Single Disbursement Lump Sum payment plan.
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Mortgage Amounts Are Based On the Following
Age of the youngest borrower or eligible non-borrowing spouse
Current rates; and
Lesser of:
appraised value;
the HECM FHA mortgage limit of $679,650; or
the sales price (only applicable to HECM for Purchase)
When there is 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 of the costs of a Eugene HECM by financing them and having them paid through the proceeds of the loan. Financing the costs means that you don’t have to pay for them out of your pocket. However, financing the costs lowers 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 get 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 compensate the mortgage company for processing your HECM loan. A lender may 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
Loan companies in Eugene or their agents provide servicing throughout the life of the HECM. Servicing includes sending you account statements, disbursing loan proceeds and ensuring that you stay up with loan guidelines which include 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.
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Shopping for a Home Equity Conversion Mortgage in Eugene OR
If you’re considering getting a HECM in Eugene, shop around. Determine which type of reverse mortgage could be best for you. That may depend on what you want to do with the loan. Evaluate your options, terms, and fees from various HECM loan providers in Eugene. Learn as much as you are able to about reverse mortgages before you talk to a counselor or loan officer. And ask plenty of questions to make sure a HECM will work for you – and that you’re receiving the right kind for you.
Here are some things to consider:
Are you wanting a HECM to pay for home repairs or property taxes? If you do, determine whether you qualify for any low or no cost grants in your Eugene. Staff members at the Eugene Area Agency on Aging might know about the programs in your Eugene. Find 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 home? You might be capable of borrow more money with a proprietary reverse mortgage. But the more you borrow, the bigger the fees you will pay. Additionally you might consider a HECM loan. A HECM counselor or a lender in Eugene can assist you evaluate these kinds of loans side by side, to see what you will get – and what it costs.
Evaluate fees and rates. This bears repeating: check around and look at the costs of the HECM loans available to you in Eugene. Even though the mortgage insurance premium is usually the same from lender to lender, the majority of loan costs – including origination fees, interest rates, closing costs, and servicing fees – fluctuate between loan providers.
Understand total costs and loan repayment. Ask a counselor or lender to explain the Total Annual Loan Cost (TALC) rates: they show the projected annual average cost of a HECM, including all the itemized costs. And, regardless of what form of HECM you’re considering in Eugene, recognize all the reasons why your loan might have to be repaid prior to were planning on it.
What You Need To Know About HECM Loans in Eugene Oregon
If you get a HECM of any kind, you get a loan in which you borrow against the equity in your house. You keep the title to your home. Instead of paying monthly mortgage payments, though, you receive an advance on part of your home equity. The money you receive usually is not taxable, and it generally will not affect your Social Security or Medicare benefits. Once the very last surviving borrower dies, sells the home, or no longer lives in the house as a principal residence, the loan has to be repaid. In certain situations, a non-borrowing spouse may be able to stay in the home. Here are some items to consider about home equity conversion mortgages in Eugene OR:
You owe more over time. As you get money through your home equity conversion mortgage, interest is added onto the balance you owe each month. Which means the amount you owe increases as the interest on your loan adds up over time.
Interest rates might change over time. Most HECM’s have variable rates, that are linked with a financial index and change with the market. Variable rate loans normally present you with more choices on how you get your money through the HECM loan. Several reverse mortgages – mostly HECMs – offer fixed rates, but they also generally require that you take your loan as a lump sum at closing. Generally, the total amount you can borrow is less than you have access to with a variable rate loan.
Interest is not tax deductible each year. Interest on reverse mortgages is not deductible on income tax returns – until the loan is paid off, either partially or in full.
You must pay other costs associated with your home. In a HECM, you keep the title to your
Eugene home. This 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 take care of your home, the lender might require you to repay your loan. A financial assessment is required when you apply for the mortgage. Because of this, your lender might require 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 partner may continue to live in the home even after you pass away if he or she pays taxes and insurance, and will continue to take care of the property. However, your spouse will stop getting money from the HECM, since he or she wasn’t part of the loan agreement.
What can you leave to your heirs? HECM’s may use up the equity in your home, which means less assets for you and your heirs. Most reverse mortgages have something called a “non-recourse” clause. This means that you, or your estate, can’t owe more than the value of your home once the loan becomes due and the home is sold. With a HECM, generally, if you or your heirs want to pay off the loan and keep the home instead of sell it, you would not have to pay more than the appraised value of the home.
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