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Is a Reverse Mortgage right for me? Imagine this…you’re 62 years old or older, and you’re saying to yourself, “I sure wish I had a little extra cash every month to work with.” or, “I really need to feel a little more secure with my retirement.” or, maybe you’re financially stable but never realized how smart a move it would be to convert your mortgage into a “Reverse!”
A Reverse Mortgage loan is available to homeowners who are 62 years or older and enables them to convert part of the equity in their home into cash.
The product was conceived as a means to help retirees with limited income use the accumulated wealth in their homes to cover basic monthly living expenses and pay for health care. However, there is no restriction for how proceeds can be used.
The loan is called a reverse mortgage, because the traditional mortgage payback stream is reversed. Instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower.
You are not required to pay back the loan until the home is sold or otherwise vacated. As long as you live in the home, you are not required to make any monthly payments toward the loan balance, but you must remain current on your property taxes, homeowners insurance and condominium fees (if you live in a condo).
Check out our recent article that explains the Facts about a Reverse Mortgage
The most common type of reverse mortgage is the Home Equity Conversion Mortgage, or the HECM. This program was created by the Federal Housing Administration in 1988. The reverse mortgage is different from a traditional home mortgage in that the interest is not due until the loan has reached maturity. As long as the homeowner still lives on their property and pays their property taxes and insurance, they can take advantage of not making monthly payments on the money they borrowed.
With a reverse mortgage you continue to own your home, paying your property taxes and homeowners insurance just as before. Like any mortgage, you will receive a monthly statement which will outline all interest charges and balance information. The only difference will be the absence of a coupon to return your monthly payment as no payment is necessary.
Reverse mortgages are available to all US citizens and permanent residents age 62 or older with substantial equity in their home. The maximum loan amount you may qualify for depends on the youngest homeowner’s age, current rates, and home value. There is no income or credit score requirements as there are no monthly repayments. The requirements are that you continue living in your home as your primary residence and continue to pay your property taxes and insurance.
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You can decide whether your voluntary repayments of the mortgage interest are in-part or in-full without fear of penalty. That’s right; you can make payments back on your reverse mortgage. You can also deduct that mortgage interest just as you would a traditional home loan, and you have the option to pay off the entire loan at any time. You can pay it off with cash, refinancing or selling. Some believe that once you get a reverse mortgage the bank will eat all of the homes equity, leaving your heirs with nothing but a mound of debt. Wrong! While no one can predict your home’s appreciation, you can rest assured that your heirs have no issues because of your reverse mortgage.
Unless repaid voluntarily, the reverse mortgage is not due until the last surviving borrower passes away or no longer occupies the property as their primary residence. The heirs will have up to 12 months to complete a sale or refinance transaction to pay back the balance of the loan. If your heirs choose not to act, the reverse mortgage lender will have no choice but to foreclose on the home. In the event that the sale of the property does not yield enough to pay off the remaining balance of the loan, the government insurance that you would have paid for as a part of closing your reverse mortgage loan will cover your estate. The Lender will be reimbursed for any shortfall from the mortgage insurance fund.
No mortgage payments are required under this government-guaranteed program; however, the property owner is liable to pay the real estate tax and the insurance coverage costs for their residence. Home owners are required to meet with a counselor prior to taking advantage of the reverse mortgage. Use the Reverse Mortgage Loan Calculator below and we’ll help calculate your personal scenario.
Sun American Mortgage has one of the most skilled personnel in the market in order to help you review your wants and needs. To see just how the Reverse Mortgage could be work for you, please call us today for additional information or to arrange a no-cost at home visit. 480-832-4343
Below are some commonly asked reverse mortgage pros and cons questions.
Q: What is a reverse mortgage?
A: A reverse mortgage is a unique kind of loan that permits you to borrow against the equity that you’ve accumulated in your home. Unlike a typical home equity loan, a reverse mortgage does not get repaid instantly. That means there are no regular monthly checks to your lending institution for payment. The HECM Reverse mortgage program is guaranteed by the Federal Housing Administration (FHA).
Q: Can anyone qualify?
A: No, you need to be at least 62 yrs old. You additionally need to either own your house outright or have substantial equity with the ability to repay your residence with the proceeds from a reverse mortgage. You have to remain in your residence, and your home has to satisfy particular requirements in accordance with HUD. You must also meet with a reverse mortgage counselor and go through a financial assessment. All this to make sure that it’s the right fit for you.
Q: How do I obtain a reverse mortgage?
A: You could obtain a reverse mortgage with a qualified Reverse Mortgage Arizona lending institution. Prior to you obtaining a reverse mortgage, you need to have a session with a reverse mortgage expert. Typically the counseling expense (around $100) can be rolled right into the finance. But we have GOOD NEWS! Sun American Mortgage doesn’t charge a fee for this “counseling session.” You can come in our office, or we can come to your home and meet with you personally.
Q: If I secure a Reverse Mortgage, does the financial institution own my residence?
A: No. The title stays with the debtor. However, when your residence is sold, you or your estate should settle with the lending institution any type of money you got from the reverse mortgage along with rate of interest and various other costs. Any type of remaining equity in the residence goes to you or your beneficiaries.
Q: Do I still have to pay my real estate tax as well as home insurance coverage?
A: Yes. Reverse mortgages are not like regular mortgages, wherein, insurance and tax obligations are paid out of an escrow account. You would certainly need to pay those expenditures. If somehow your property owner’s insurance coverage has actually expired, you will have to restore your plan. You additionally have to be current on any type of property insurance costs as well as real estate tax.
Q: When do I need to repay the loan?
A: When you pass away, sell your house or completely relocate.
Q: Is an HECM Reverse costly?
A: There could be in-advance costs with Reverse Mortgages (i.e. mortgage insurance policy costs, finance source charges), yet these charges are controlled by the Federal Government. Often these charges could be rolled right into the funding or entirely waived in particular circumstances.
Q: What’s the very best age to get a Reverse Mortgage?
A: Each individual is one-of-a-kind in their demands and also needs. Each person or each family member ought to examine their scenarios with a certified expert to figure out at which age they could benefit from the Reverse Mortgage Arizona program.
EXPERTS FOR 25 YEARS!
At Sun American, we served the initial Reverse Mortgage over 25 years ago. Ever since then, we’ve been doing Reverse Mortgages for people around the wonderful state of Arizona, likewise in Utah, California and New Mexico. See why many count on Sun American Mortgage Company when it pertains to understanding as well as protecting a Reverse Mortgage!
Not many mortgage professionals are CPA’s. I bring that extra level of financial expertise to each transaction to ensure you and your family is making the best decision to meet your goals. 👊
I’ve been in the mortgage industry since 1978 and love to fly across Arizona in my single engine airplane to help various consumers learn and obtain a reverse mortgage. Give me a call today!
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In 2006, the Federal Housing Administration (FHA) created the HECM For Purchase loan. This innovative loan program was designed to help seniors purchase a new primary residence using a reverse mortgage – all within a single transaction! Learn more by downloading our free guide!
We understand you may not be sure if this is the right move for you or not. That’s why we are here to provide you with resources to help you make the decision that is best for you! Check out our FREE brochure that explains more so you can feel great about your next chapter.
Is a Reverse Mortgage right for me? Imagine this…you’re 62 years old or older, and you’re saying to yourself, “I sure wish I had a little extra cash every month to work with…” or, “I really need to feel a little more secure with my retirement…” or, maybe you’re financially stable but never realized how smart a move it would be to convert your mortgage into a “Reverse!”
Watch this video to learn more.
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