Hometown Lending

Reverse Mortgage Overview

Here at Hometown Lending in Bellingham, we keep very busy with conventional mortgages, FHA Loans, USDA mortgages, and plenty of commercial mortgages.  One product that has gained a lot of popularity in the last decade is the reverse mortgage.  I am excited that Hometown Lending has a dedicated reverse mortgage expert at our disposal.  Mark O’Brien has been involved with reverse mortgages for over 15 years, so I’ve asked him to write a quick ‘primer’ to explain the basics of a reverse mortgage:

The FHA Reverse Mortgage Program is a great program that allows senior homeowners (over age 62), to access their home equity and convert it into cash, providing themselves with a better quality of life. Quite simply it works like this:

1. Using the age of the youngest borrower and the value of the home, an available loan amount to the homeowner is determined.
2. Once determined the homeowner can choose their best option of how to receive the available funds. Options include receiving a lump sum payment, ordinarily used to pay off an existing mortgage. If there is no mortgage on the property, the homeowner could choose to receive a monthly stipend that would be available for as long as the homeowner lives in the home. A third option would be to leave it in a line of credit, which grows very much like a savings account, and allows the homeowner to draw from whenever the need arises. The line of credit option only accrues interest on the outstanding balance of what has been borrowed. The Reverse Mortgage is a loan that doesn’t ever have to be repaid as long as the homeowner remains in the property. It will accrue interest over the life of the loan, and will be repaid with the sale of the home.
3. The loan is insured by FHA which guarantees that the end investor will receive full repayment of the loan even if there is no remaining equity in the property. In that instance FHA would sell the property for what it can get and makes up the difference from its mortgage insurance fund. There is no deficiency judgement against  the homeowner or the estate. Most closing costs are wrapped into the loan but with the ordered use of AMC’s, the appraisal and counseling fees must now be paid upfront.

It has been a pleasure for me to be able to help hundreds of really nice folks through the loan process. It has enabled them to greatly enhance their living experience, as well as allowing me to share in some wonderful moments and friendships. If ever I can be of service, I would be honored to do so.

So, if you are a family member are looking for more information about Reverse Mortgages, or just need to decide if this is the right program for you, please contact Hometown Lending in Bellingham, and we will connect you with Mark.