A reverse mortgage is a unique financial tool offering qualified borrowers access to their home equity. Applying for a reverse mortgage Arizona could be the critical component of your retirement planning. The reverse mortgage AZ provides retired seniors funds that can be used to pay for their medical bills, travel, and other expenses. This post highlights some critical aspects regarding reverse mortgage AZ.
How Does Reverse Mortgage Work?
As the name suggests, a reverse mortgage is the opposite of conventional home loans. Housing loans require that the borrower pays the mortgage lender monthly mortgage repayments. With a reverse mortgage, you get funding from the lender, and you do not pay any monthly repayments. The conventional home loan is used to buy or build a home, while the reverse mortgage; you take part in the home equity converting it into payments to you.
When you apply for a reverse mortgage, you get a loan in which you are borrowing against home equity. However, the borrower retains home title and does not have to pay monthly mortgage repayments. The money you get through the reverse mortgage is non-taxable. The borrowed amount will not appear on social security or Medicare benefits. Before applying for the reverse mortgage AZ, bear in mind the following facts:
Fee and other costs associated with Reverse Mortgage:
- The reverse mortgage lenders charge an origination fee and closing costs.
- The borrower pays the reverse mortgage-servicing fee over the life of the mortgage.
- Some reverse mortgage lenders charge mortgage insurance premiums.
The borrower owes the lender most of the time. The money borrowed through a reverse mortgage comes with some interest balance that accumulates monthly. Therefore, the borrowed amount grows as the interest on your loan adds up over time.
Interest rates on reverse mortgage change overtime. Most reverse mortgages will have variable rates tied to the financial index and changes with the market. The variable rate loans tens to give the borrower more options for getting money through a reverse mortgage.
The Types of Reverse Mortgage
As you consider whether to borrow a reverse mortgage, you must research the different reverse mortgage options available out in the market. Here is an overview of the various reverse mortgage types:
● Single-Purpose Reverse Mortgage
The single purpose reverse mortgage is the least expensive option, and it is offered by some non-profit organizations, state, and local government agencies. However, the type of reverse mortgage is not available anywhere. As the title suggests, the type of mortgage can only be used for one purpose, as specified by the lender. Most homeowners with low or moderate-income qualify for the single-purpose reverse mortgage.
● Proprietary Reverse Mortgage
This private loan is backed by companies that own the reverse mortgages. Thus, if you own a high-value home, you may borrow a high amount from the lending companies.
● Home Equity Conversion Mortgages
Insured by the federal government, the HECMs can be used for any purpose. However, the upfront costs on the HECMs can be so high. The reverse mortgage type is ideal for borrowers planning to stay in the home for a short time or borrow a small amount.
How Do I Qualify for the HECM Reverse Mortgage?
The HECM reverse mortgage is federally insured and backed by the U.S. Department of Housing and Urban Development (HUD). The main advantage of this type of reverse mortgage is that it does not impose any restrictions on how the funds are spent. Here are some of the requirements to qualify for the reverse mortgage Arizona:
- You are 62 years or above.
- You and the eligible spouse named on the loan even if he or she is not a co-borrower
- Live in the home as your primary residence.
- You do not have delinquent federal debts.
- You own the property outright or have a high amount of equity in it.
- Attend the mandatory HECM counseling
- The property meets the mandatory FHA property standards.
- Keep paying all the property taxes and property maintenance costs.
If you meet the above HECM qualification criteria, you can tender an application for the reverse mortgage Arizona. Seek guidance from your preferred mortgage broker.
What are the Advantages of HECM Reverse Mortgage, Arizona?
Reverse mortgage AZ offers various advantages to the borrowers. Here is an overview of some of the benefits of Arizona Reverse Mortgage.
- Flexibility: The HECM Reverse mortgage Arizona is a tremendously flexible financial tool that can be utilized differently. For instance, households with financial needs can tailor the product to distress their finances.
- Allows the Borrower To Retain Home Ownership: the core advantage of reverse mortgage Arizona is that it will enable the borrowers to live in the home. There are no monthly repayments.
- Low Risk of Default: unlike the conventional home loan, your home is not at risk of foreclosure due to defaulted home loans.
Reverse mortgage Arizona provides seniors alternative finance to cater for the immediate needs. The application process is relatively easy, and borrowers can access the funds immediately.