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Reverse Mortgages are becoming increasingly popular in Arizona, as they are in the rest of the United States. Seniors may be interested in Reverse Mortgages for a variety of reasons: to supplement social security, to cover medical expenses, to make home improvements, to repay existing mortgages, to reduce financial burden on children, to name a few. Below are answers to the most common questions seniors may have regarding Reverse Mortgages. Click HERE to use our Reverse Mortgage Calculator for a free, no obligation, personalized quote from three reverse mortgage programs: FHA/VA, HUD, and Financial Freedom. What is a Reverse Mortgage? A reverse mortgage is a loan that enables senior homeowners to convert part of the equity in their home into tax-free income, without having to sell the home, give up title, or take on a new monthly mortgage payment.
To qualify for a reverse mortgage, you must: - Be at least 60 years old. In the case of a couple or co-owners, both must be 60 if their names appear on the title to the home. A person can be removed from title to allow for reverse mortgage qualification.
- Be a homeowner with equity. The home must be your primary residence.
- Credit history, employment, and income are NOT considered when qualifying for a reverse mortgage.
"How much money can I receive?" The amount of money a reverse mortgage will allow you to access will depend upon your age, the value of your home, and the interest rates at the time of application. There are various reverse mortgage programs so it's important that we help you understand which might suit your needs.
"How can I receive the money?" You decide how you receive the funds. You might choose:
- An upfront lump sum payment
- A line of credit you can access whenever you want
- Fixed monthly payments for as long as you remain in your home, or a combination of the above
"Are there limits on how I can use the money from my reverse mortgage?" No. Borrowers have used reverse mortgages for a variety of purposes, such as paying health care expenses, supplementing retirement income, home repairs, or traveling. Some have used reverse mortgages to purchase recreational vehicles, start a business, eliminate expenses, or as an early inheritance for family members.
According to a survey completed by AARP in conjunction with HUD, homeowners who elected to take a reverse mortgage used the funds in a variety of ways.
- Hospital/healthcare costs 67%
- Repay existing mortgages 55%
- Reduce burden on children 50%
- Home repair/improvement 50%
- Pay property taxes 38%
- Daily Expenses 29%
- Travel, something special 14%
- Gifts 3%
How do I start the process? The first step is to meet with one of our dedicated reverse mortgage executives who will help you analyze your goals and objectives and see if a reverse mortgage is right for you. This consultation is free and there is no obligation on your part.
There are a number of safeguards built in to the reverse mortgage for your protection. They include: - Advance counseling by a government certified counselor who will review the transaction, answer any questions you have about reverse mortgages, and suggest additional options.
- There are limits on the interest rates and closing costs
- The loan balance can never exceed the value of the home at the time of repayment. Full written disclosure of all options and costs associated with your reverse mortgage.
More answers to commonly asked questions: Q. Are reverse mortgage proceeds taxable income, and can they affect my social security or other government benefits?
A. Funds from a reverse mortgage are tax-free and are not considered additional income. A reverse mortgage does not affect regular social security or medicare benefits. A lump sum advance retained
the month after you get it could count as a resource that does affect Medicaid benefits so its best to discuss this with your reverse mortgage executive or Medicaid expert.
Q. Do I retain ownership of my house?
A. Yes! A reverse mortgage is a lien just like a traditional mortgage. Repayment is required when the last surviving borrower sells the house, moves, or passes away.
Q. Will my heirs owe anything to the mortgage lender if I die?
A. Upon the death of the last surviving occupant borrower, the loan balance (consisting of principal paid to you or on your behalf, plus accrued interest) becomes due and payable. Your estate may choose to repay the loan by selling the property or they may want to pay it off by other means so they can keep the home. If the loan should exceed the value of the home at that point, your estate will not be responsible for this difference. This is where the government insurance steps in and pays off the shortage.
Q. Will I have to pay fees to obtain a reverse mortgage?
A. Yes, however your out-of-pocket expense is only $300, paid at the start of the loan. This amount is applied to the cost of the appraisal upon closing. All other closing costs and fees can be financed into your loan.
Q.Can I change how I receive the funds after I close?
A. Yes. The reverse mortgage allows you to adjust how you receive your funds, even after closing. Ask your reverse mortgage executive for more details.
Q. Will I have to sell or move if the money I owe on the loan ever exceeds the value of my home?
A. Absolutely not, as long as you continue to occupy the property as your principal residence.
Q. How do I find out more?
A. Feel free to contact one of our Reverse Mortgage Specialists:
Glen Smart: 520-425-8750 Tucson, Arizona
Robin Loomis: 520-440-4387 Tucson, Arizona
Kevin McAree: 520-399-0900 Green Valley, Arizona
Ed Jesionka: 520-820-4142 Tucson, Arizona
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Reverse Mortgages
