How Does a Reverse Mortgage Work?

Stone Bridge Mortgage Group_Things To Know About Reverse Mortgages

What is a reverse mortgage?

A reverse mortgage allows homeowners of a certain age, 62 years and older, to borrow from their home’s equity without having to make monthly mortgage payments. As the borrower the homeowner may then choose to take funds in a lump sum, line of credit or via structured monthly payments. The repayment of the loan is required when the last surviving borrower vacates the home permanently.

On a traditional “forward” loan, you make payments and the amount you owe is reduced while the equity you have on the property increases over time. A reverse mortgage is the opposite. You make no regular payments, so as you draw out funds and as interest accrues on the loan, the balance grows and your equity position in the property becomes smaller.

How does it work?

First, you must access a portion of your home’s equity. The percentage is based on age of youngest borrower. When the mortgage is reversed, you make no monthly mortgage repayments. The funds you receive from a reverse mortgage are tax-free, and may be used for virtually anything. The loan from your reverse mortgage is repaid when you pass away or sell your home. After that, any remaining equity belongs to your heirs.

Something important to note is that in addition to the fact that there is never a payment due on a reverse mortgage, and there is also no prepayment penalty of any kind. In other words, you can make a payment at any time, up to and including payment in full without penalty.

How much can you receive on a reverse mortgage?

There are several factors that dictate the loan amount, including the age of the youngest borrower, value of the home or the HUD lending limit (whichever is less), the interest rates in effect at the time, any costs to obtain the loan (which are subtracted from the principal limit), and any existing mortgages and liens (which must be paid in full). The current HUD lending limit for 2019 is $726,525.

If there are multiple borrowers, the age of the youngest borrower will lower the amount available because the terms allow all borrowers to live in the home for the rest of their lives without having to make a payment.

Weigh the costs and benefits of taking out a reverse mortgage.

A reverse mortgage doesn’t work for everyone. If you do the math and find that, even with a reverse mortgage you will still be struggling to get by, it may be best not to use your equity at this timed. Do your research and plan carefully. Will the funds and accrued interest add up to more than your home is worth? For those who are thinking of moving to a new home anyway, it may be better to move now. Don’t use your reverse mortgage as a temporary solution.

For professional assistance with mortgages, look no further than Stonebridge Mortgage Group. You can rely on Stonebridge Mortgage Group to help guide you through the home buying process from start to finish. We help get you pre-approved for a mortgage and help with your real estate loans and other We serve the greater Portland area and are in Gresham, Oregon. Don’t wait to get quality assistance with buying your home!

Call us today at 503.661.558 to get started!

 

 

Important Information to Understand

  1. At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds.
  2. Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees.
  3. The loan balance grows over time and interest is charged on the outstanding balance.
  4. The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home.
  5. Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full repayment.

 

Live/Work Spaces And How To Find The Perfect One

Stone_Bridge_Mortgage_Live-Work Spaces And How To Find The Perfect One

Artists, musicians, and performers thrive in spaces that house both their passions and their possessions, but finding those spaces can be such an effort that many creative types end up working out of their garages. That might be fine for some, but others require spaces that accommodate their work, their belongings, and themselves under one roof.

Live/work spaces may bring to mind images of urban lofts, exposed brick, concrete floors, and service elevators — and that’s not entirely incorrect, but they can be much more. Today’s live/work spaces are not relegated to the paint splattered artist or musically inclined recluse. Retailers, restauranteurs, and manufacturers are all finding utility in the live/work arrangement.

So how do you find the right live/work space for your particular working and living preferences?

Start with location. If your business needs foot traffic, urban areas are replete with spaces that cater to creatives and their livelihoods. These spaces are often renovated and reimagined buildings with historic value – which can also be an asset in your live/work space.

Next, consider the amount of square footage you need to peacefully coexist with your work. You may find yourself more suited to a converted warehouse or barn than an airy loft. Take the time to deliberately examine your footage needs before leaping to any live/work conclusions.

Finally, consult with a mortgage professional. Stonebridge can help you find the perfect financing options for your live/work space so you can finally get on with the business of living and working.

At Stonebridge Mortgage we are dedicated to making sure you end up in the live and workspace of your dreams. If you need any buying or financing for your home or office, we are here to help. Learn more about Loan Officers from Stonebridge Mortgage or you can check out all Stonebridge Mortgage’s services.

Contact Us Now to Start Your Financing Journey

Or Give Us a Call at 503.661.5580

 

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