Securing a Oklahoma Reverse Mortgage

An Oklahoma reverse mortgage is a loan provided by a lender in return for access to your home equity.  In other words, you give your lender the right to own your home equity, and the lender provides you with money equal to the amount of equity you possess minus expenses.  This loan type provides you with steady, reliable income that doesn’t have to be paid back as long as you own and live in your home.

What is a reverse mortgage?

The purpose of all reverse mortgages in Oklahoma is to ensure that seniors and retirees who own homes are able to access and transform the money they’ve put into these homes over the years. The lender pays the reverse mortgage borrower out of their own home equity, instead of the other way around.

How can reverse mortgage funds be used?

You can spend the money you get through your reverse mortgage on anything you need.  This is different than many other financial options in which your spending power is limited. 

What types of reverse mortgages exist?

Reverse mortgages have three forms:

• Goverment-insured: FHA HECM (Home Equity Conversion Mortgage).
• Single-purpose: backed by nonprofits or state or local government agencies. 
• Proprietary: backed by private entities.

The most common source is the FHA HECM reverse mortgage, which is insured by the Department of Housing and Urban Development (HUD). This article will focus on HECM reverse mortgages.

Who can get a reverse mortgage?

Homeowners aged 62 and older who own their home outright and have most of their mortgage paid off. If the current mortgage is not paid off, the initial reverse funds or some combination with out-of-pocket cash must be used to deplete the remaining balance. Credit score is not a qualifying factor. 

What costs are associated with a reverse mortgage?

There are several costs associated with securing an HECM reverse mortgage in Oklahoma, including but not limited to:

• Upfront fees: include the lender's fees, and can be paid from the reverse mortgage funds. This means, however, that the money taken cannot be borrowed back. So a $200,000 reverse mortgage with $16,000 in fees paid via the reverse mortgage funds will leave the homeowner with $184,000. 
• Closing fees: include all the same fees required of a traditional mortgage closing. 
• Reverse mortgage counseling fees: HUD mandates all reverse mortgage homeowners attend reverse mortgage counseling. Fees are in the $100 range but can be waived for lower income seniors. 
• Mortgage insurance: an upfront mortgage insurance premium (MIP) must be paid for reverse mortgage borrowers. It can be as low as 0.5% and as high as 2.5% of the appraised home value, unless the home is over $625,500, in which case the upfront mortgage insurance is calculated by the lender. 

How will I receive my funds, and for how long?

You can arrange to receive your reverse mortgage money in several different ways.

• As a lump sum, all at once.
• As monthly income, paid out in installments.
• As a credit line you can access when you need to.

If none of these options is right for you, you r lender will likely allow you to combine two or more of them.  For example, you could receive a third of your equity as a lump sum up front and arrange to access the rest through a line of credit.  Or you could get a portion each month as income but keep some tucked away in a line of credit in case you need it.

Does the equity need to be repaid?

As mentioned above, the lender provides this money to you in exchange for the value of your home equity.  You don’t have to pay this debt back unless you sell or home or leave your home to live somewhere else.  In these cases, the lender will need to recoup the value of the equity loaned out.  Most of the time, seniors choose to continue living in their homes for the rest of their lives and never have to pay back a dime.

When you pass away, the ownership of your home will transfer to your heirs.  Your heirs will be required to pay back the full debt amount if they wish to keep the home.  If not, they can sell the home and deliver the money to the lender to pay off the loan.  Your lender cannot collect more that what the home sells for.  This is the law, and it is designed to protect your heirs from paying back additional debt they can’t afford.

Oklahoma Reverse Mortgage Lenders

Most lenders have experience providing reverse mortgages.  Unfortunately, many lenders charge high origination and closing fees on the reverse mortgages they administer.  They do this because your equity is already established.  They know you have the money and the ability to pay for the loan, and this allows them to charge high fees.

Make it your goal to find a lender who will charge a fair price.  Ask at least four or five lenders in your part of Oklahoma what rates and fees they charge.  Work with the one who can meet your needs for the lowest price.  To learn more about getting one of these loans, read our reverse mortgage checklist.

Oklahoma Senior Resources

Oklahoma's Department of Human Services has an aging resources division that lists a number of community programs available to seniors to help them remain independent while living at home. There is also information for seniors with disabilities. Programs are available statewide, and more concentrated in larger areas like Tulsa. 

Lenders in: Oklahoma.