BUSINESS
WEDNESDAY, JANUARY 14, 2015
A4 HERMISTONHERALD.COM
Send submissions or story ideas for the Herald Business page to Editor Jessica Keller, jkeller@hermistonherald.com
Pros and cons
of reverse
mortgages
D
uring the last
decade, reverse
mortgages have
been marketed as an easy
way for seniors to cash in
their home equity to pay
for living expenses. Many
have learned, however,
that improper use of the
product — such as pulling
all their cash out at one
time to pay bills — has
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problems later, including
foreclosure.
In actuality, there are
some cases where reverse
mortgages can be helpful
to borrowers. However,
it is imperative to do
extensive research on these
products before you sign.
Reverse mortgages
are special kinds of home
loans that let borrowers
convert some of their home
equity into cash. They
come in three varieties:
single-purpose reverse
mortgages, Home Equity
Conversion Mortgages
and proprietary reverse
mortgages.
Who can apply?
Homeowners can apply for
a reverse mortgage if they
are at least 62 years old,
own their home outright
or have a low mortgage
balance that can be paid off
with the proceeds of the
reverse loan. Qualifying
homeowners also must
have no delinquent federal
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to pay for upkeep, taxes and
insurance and live in the
home during the life of the
loan.
Consider the following
pros and cons as a
starting point for trying or
bypassing this loan choice.
Even though HECM loans
require a discussion with
a loan counselor, you
should bring in your own
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advisor to help you decide
whether you have a safe
and appropriate use for this
product.
Pros of reverse
mortgages:
• They’re a source of
cash. Borrowers can select
that the amount of the loan
be payable in a lump sum
or regular payments.
• Proceeds are
generally tax-free. Final
tax treatment may rely
on a variety of personal
factors, so check with a tax
professional.
• Generally, they don’t
impact Social Security
or Medicare payments.
Again, important to check
personal circumstances.
• You won’t owe more
JASON ALDERMAN
MONEY MATTERS
Visa columnist
than the home is worth.
Most reverse mortgages
have a “nonrecourse”
clause, which prevents you
or your estate from owing
more than the value of
your home when the loan
becomes due and the home
is sold.
• Reverse mortgages
may be a smarter
borrowing option for
some downsizing seniors.
With proper advice, some
borrowers use them to buy
new homes.
Cons of reverse
mortgages:
• You may outlive your
equity. Reverse mortgages
are viewed as a “last-
resort” loan option and
certainly not a singular
solution to spending
problems.
• You and your heirs
won’t get to keep your
house unless you repay
the loan. If your children
hope to inherit your
home outright, try to
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solution (family loans,
other conventional loan
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• Fees can be
more expensive than
conventional loans.
Reverse mortgage
lenders typically charge
an origination fee and
higher closing costs
than conventional loans.
This adds up to several
percentage points of your
home’s value.
• Many reverse
mortgages are adjustable
rate products. Adjustable
rates affect the cost of the
loan over time.
• If you have to move
out for any reason, your
loan becomes due. If you
have to suddenly move
into a nursing home or
assisted-living facility, the
loan becomes due after
you’ve left your home for
a continuous year.
Bottom line: Reverse
mortgages have
become a popular, if
controversial, loan option
for senior homeowners.
For some, they may
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applicants should get
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before they apply.
— Jason Alderman
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education programs. To
Follow Jason Alderman
on Twitter: www.twitter.
com/PracticalMoney
SEAN HART PHOTOS
Real Business Solutions owner Carol Frink said she ‘teaches business owners business skills’ primarily using the phone and
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Downtown Hermiston businesses celebrating
Real Business
Solutions, Home
Town Mortgage
Group event
planned Thursday
evening
BY SEAN HART
HERMISTON HERALD
Two businesses in one
building in downtown
Hermiston are hosting a
joint celebration tomorrow
evening that is open to the
public.
Real Business Solutions
LLC is celebrating a grand
opening and Home Town
Mortgage Group is cele-
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from 5 p.m. to 8:30 p.m.
Thursday in their building,
505 E. Main St.
Melisa Webb, who oper-
ates Home Town Mortgage
Group with Kim Arbogast,
said the business has been
in operation for almost four
years but moved into this
new building a little more
than a year ago.
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a corner of activity,” she
said of the location. “This
part of Main Street didn’t
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Main Street businesses are
always looking for that
hype. We just want people
to know we’re here and to
come visit and hang out and
know what we do.”
She said the event will
feature wine, beer, cup-
cakes and live music.
Real Business Solutions
owner Carol Frink said she
started her business from her
home in 2012 and moved
into the building last year.
She invited people to “enjoy
a really fun evening” at the
celebration Thursday.
After outgrowing her
space at home, Frink said
the location on Main Street
has worked out well, and
she plans to expand later
this year to utilize a confer-
ence room within the same
“Bottom line: Reverse mortgages
have become a popular, if
controversial, loan option for
senior homeowners. For some,
they may be a good fit, but all
applicants should get qualified
financial advice before they apply.”
5HDO%XVLQHVV6ROXWLRQVRZQHU&DURO)ULQNVLWVDWWKHGHVNRIKHURIÀFHZKHUHVKHZLOOFHOH-
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building.
Frink said, when she
managed Bank of America
years ago, she hired Webb
so she could get her start in
the mortgage business, and
it was “meant to be” they
should end up in the same
building again.
“It just feels so cool to
be here in the same build-
ing,” she said. “We worked
together for so many years.
The renovation of this
building is just awesome.”
Frink said Real Busi-
ness Solutions works with
business owners, teaching
them skills to improve their
operations, primarily using
the phone and computer,
but also in person. She said
she has clients locally and
throughout the nation.
“I teach business owners
business skills,” she said.
“Businesses are really clear
on their product and ser-
vice. They’re really good at
working in their business.
That’s important, but you
can only get so far working
in your business. It’s a mix
of working in it and on it.”
She said business own-
ers need to have a direction
and a business structure and
that personal goals must
align with business goals.
She said this helps deter-
got to know if you’ve got
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the only way to do that is to
have an income statement
that tells you that — not
at the end of the year, this
shoe box that you take and
Real Business Solutions LLC is
hand to the accountant and
celebrating a grand opening
say good luck.”
and Home Town Mortgage
Frink said a business’s
Group is celebrating its first
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anniversary from 5 p.m. to 8:30
real story about what’s go-
ing on” that is important to
p.m. Thursday in their building,
know.
505 E. Main St., Hermiston.
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The event will feature hors
fectly together: When one’s
d’oeuvres, local wine tasting
out of alignment, it throws
and music.
the others out of align-
ment,” she said. “Once you
mine a business’s products develop your business mus-
cle, you can literally get
and services.
Frink said a business whatever you want from
should then narrowly de- your business, and until you
WHUPLQH DQG GH¿QH ZKR LWV do that, you can’t. You stay
ideal clients are and create a stuck. You stay small. You
VSHFL¿FPDUNHWLQJPHVVDJH stay in the same patterns
and a plan to reach those that don’t serve you well.”
It is also important, she
clients.
From there, she said, she said, for business owners
focuses on helping business to be connected to “other
RZQHUV XQGHUVWDQG WKHLU ¿- like-minded business own-
ers.”
nances.
For more information
“You’ve got to under-
stand your money and what about Real Business Solu-
it’s telling you,” she said. tions, call 541-720-1001,
“You need to understand or visit http://www.real-
your revenue, your cost businesssolutionsllc.com/.
of goods sold, your gross For more information about
SUR¿WPDUJLQ\RXUH[SHQV- Home Town Mortgage
es, breaking even. You’ve Group, call 541- 564-5900.
Joint business
celebration
on tap
BUSINESS BITES
Grand opening planned at Hermiston bank
A grand opening and ribbon-cutting ceremony for
Umpqua Bank will take place at noon today at the bank,
450 N. First St., Hermiston.
Business luncheon scheduled
Fitness center to cut ribbon
A ribbon-cutting ceremony for Higher Power Fit-
HermistonHerald
VOLUME 109 ɿ NUMBER 4
JESSICA KELLER
EDITOR
jkeller@
hermistonherald.com
541-564-4533
MAEGAN MURRAY
REPORTER
mmurray@
hermistonherald.com
541-564-4532
ness Center will take place at noon Jan. 26 at Corner-
stone Court, Suite 202, 1055 S. Highway 395, Herm-
iston.
The Hermiston Chamber of Commerce will host
a Business to Business Luncheon beginning at 11:45
To contact the Hermiston Herald for news, advertising
or subscription information:
• call 541-567-6457
• e-mail info@hermistonherald.com
• stop by our of¿ces at 333 E. Main St.
• visit us online at: www.hermistonherald.com
SEAN HART
REPORTER
smhart@
hermistonherald.com
541-564-4534
SAM BARBEE
SPORTS REPORTER
sbarbee@hermistonher-
ald.com
541-564-4542
a.m. Jan. 27 at the Hermiston Conference Center, 415
S. Highway 395. Oregon Rep. Greg Barreto, House
District 58, will speak. The luncheon will be catered
by Pudding on the Ritz. The cost is $10 for chamber
members and $13 for non-members. To R.S.V.P., call
541-567-6151. The luncheon is one activity during the
Oregon Water Coalition conference, which will take
place from 8:30 a.m. to 3 p.m.
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MULTI-MEDIA CONSULTANT
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