What is a Reverse Mortgage?
An Arizona Reverse Mortgage with Melinda Hipp may be just the solution for homeowners 62 and over who are house rich and cash poor or looking to downsize or upsize to a new home. A reverse mortgage is a type of home equity loan that may allow you to access the equity you have built up over the years or have available in a new purchase, while still keeping the title to the home in your name. This is all with no monthly mortgage payments and a simple financial assessment (homeowners must keep property taxes, insurance and HOA dues paid current and must maintain the home as their primary residence.) We offer reverse mortgages in Phoenix, Tuscon, Sedona, Flagstaff, Lake Havasu and surrounding areas of Arizona.
Here are some other great reasons why a reverse mortgage may be the right product for you!
- Your home’s value may be the highest it’s been in some time. Now is the time to take advantage of the steady equity growth we have recently had.
- If your home currently has a mortgage or home equity loan, the Reverse Mortgage may pay off that debt, plus any other debt you wish.
- There is now a financial assessment on all borrowers to review their income, assets and liabilities to insure that future mandatory obligations (such as taxes, insurance, maintenance and HOA dues) continue to stay current. Click Here to learn more about the financial assessment.
- You could take out a partial lump sum, take monthly installments, or set up a line of credit that continues to grow to take advantage of your home value rising.
- Utilize the Reverse Mortgage for purchase program to downsize or buy your dream retirement home and save funds for a nest egg.
How Does It Work?
Reverse mortgage loans are a way for homeowners 62 or older to convert their home’s value into cash or monthly payments without having to sell or move. Insured by the FHA Mortgage Insurance program (Melinda Hipp does not act on behalf of or at the direction of HUD/FHA or the federal government), the Department of Housing and Urban Development (HUD) allows these Homeowners to either borrow against the equity of their homes or purchase a new home based on the value or purchase price of that new property.
This is How a Reverse Mortgage works –
- Qualifying homeowners can choose to receive generally tax-free payments from reverse mortgage lenders either on a monthly basis, in a lump sum, or as a line of credit (consumer should consult a tax adviser.)
- Income, assets and liabilities will be verified.
- No repayments are required as long as at least one borrower lives in their home as well taxes, insurance and HOA dues are paid on time and the home is maintained in good condition.
- Social Security and Medicare benefits are not affected.
- Reverse mortgage lenders recover the loan amount, plus accrued interest and mortgage insurance when the last homeowner passes away, chooses to sell the home or a family member chooses to purchase the home (for more details contact me.)
- When the loan is paid in full, all remaining equity associated with the property will be distributed to your heirs (must comply with the terms of the mortgage.)
Keep in mind:
Reverse mortgage borrowers continue to own their homes. Because there are no monthly loan payments due (homeowners must keep property taxes, insurance and HOA dues paid current and must maintain the home as their primary residence), the loan balance grows over time, meaning the remaining equity in the home decreases but your home value continues to increase.
Borrowers must continue to pay homeowner’s insurance and property taxes during the loan period. It is also the borrower’s responsibility to keep up with repairs. In fact, if a borrower fails to adhere to any of these obligations, it may become immediate cause for the loan to become due. In which case, it would become payable in full.
Who is Eligible?
To be eligible for a HUD reverse mortgage, HUD’s Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own your home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. You do need to meet minimum credit requirements to qualify.
Can I apply if I didn’t buy my present house with FHA mortgage insurance?
Yes. It doesn’t matter if you didn’t buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.
What types of homes are eligible?
Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for individual condominiums units to qualify under the Spot Loan program.
How Much Can I Borrow?
The question of how much money can I borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow (homeowners must keep property taxes, insurance and HOA dues paid current and must maintain the home as their primary residence.)
What Are The Benefits?
HECM — The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage that is insured (Melinda Hipp does not act on behalf of or at the direction of HUD/FHA or the federal government) by the Federal Housing Administration (FHA). The FHA guarantees that HECM lenders meet their obligations, governs how much HECM lenders may loan to qualified borrowers, and limiting loan costs. Because this is a government insured program, loan counseling is required, by an approved HUD counselor.
HECM offers 4 draw options:
- Monthly income for a fixed term, or life
- Line of credit
- Lump sum
- Any combination of the above 3
What Are The Fees?
Just like a traditional mortgage, there will be costs associated with obtaining the loan.
These may include: an origination fee, appraisal fee, title and recording fees, survey if necessary, attorney’s fees and mortgage insurance costs. However, all these costs can be financed into the reverse mortgage and not paid out of pocket. You will be provided an estimate of these costs. There are absolutely no so called “junk” fees allowed in a reverse mortgage. On a Purchase there may be additional fees depending on the location of the home and the terms of the contract.
Is A Reverse Mortgage Right For You?
Why should I get a reverse mortgage instead of refinancing, financing or getting a home equity loan?
With a reverse mortgage, you do not have to make any monthly mortgage payments(homeowners must keep property taxes, insurance and HOA dues paid current and must maintain the home as their primary residence). Your credit score is also not the main determining factor for approval. Even if you have been turned down for a regular mortgage you still may qualify for a Reverse Mortgage.
Is a reverse mortgage a safe product?
A reverse mortgage is one of the safest loans you may possibly have. 95% of all Reverse Mortgages fall into the category of HECM’s (Home Equity Conversion Mortgage) which are insured by the FHA Mortgage Insurance program (Melinda Hipp does not act on behalf of or at the direction of HUD/FHA or the federal government.) The Department of Housing and Urban Development (HUD) through the US Government has certain guidelines and protections that regulate the fees, expenses and interest rate you can be charged. You also must attend a counseling session by an approved HUD counselor to give you independent information. Other types of Reverse Mortgages also have similar protections built in.
The Hipp Team offers Reverse Mortgages in Phoenix, Tuscon, Sedona, Flagstaff, Lake Havasu and surrounding areas of Arizona. We can help you determine if a Reverse Mortgage is right for you. Contact us for more details by completing one of our interactive forms on this website or call us at (210) 493-7332.
