A reverse mortgage is a loan that helps borrowers estimate the unencumbered value of their residential property. The loan is often given to people who are above 62 years. It helps them get the home equity of their property. Unlike other mortgage loans, a reverse mortgage doesn’t have monthly loan payments. In this post, we discuss the benefits of taking a reverse mortgage loan Phoenix and how it works.
The Importance of Reverse Mortgage
Here are four benefits of a reverse mortgage:
1. Borrowers are Protected when Housing Market Prices Reduce
The federal government insures reverse mortgage loans. Government insurance will cover you in case your mortgage balance exceeds your home equity. Borrowers can use the proceeds of their houses to pay a reverse mortgage.
2. Regular Income after Retirement
You will receive a steady income when you retire if you use your home as a primary residence. Your home equity, existing interest rate and the age of the youngest mortgage borrower are used to set a limit for your reverse mortgage. The government considers home equity if a borrower has paid part of their mortgage loan.
Reverse mortgage beneficiaries can opt to get equal payments for the rest of their lives. Or, you can get the payments for a specific period. Even so, it is risky since you can outlive your payments if you have an inconsistent income. You can borrow a mortgage loan whenever you need it.
3. Early Repayments aren’t Compulsory
The law requires you to repay the mortgage if you die, sell or move out of your house. You can repay it using the proceeds of your home. Your heir has to pay the remaining reverse mortgage.
4. Reverse Mortgage is a Non-Recourse Loan
Many people worry about what will happen to them if they lose their home equity. It is advisable to sell your home for 95 percent of the appraised value to get an FHA mortgage insurance cover. Borrowers who have an FHA cover aren’t compelled to repay more than the market value of their houses.
How a Reverse Mortgage Works
Research about reverse mortgage before you sign the application forms. Most homeowners start by borrowing a certain percentage of their home’s value. The age of the youngest mortgage borrower, current interest rates determine how much you can withdraw. There are different amounts of reverse mortgage that you can borrow. For instance, homeowners who pick a HECM with fixed interest rates get a lump sum payment in a single disbursement.
Borrowers aren’t required to repay their reverse mortgage until they relocate, die or leave their houses. Besides, you cannot borrow a loan that is more than your home equity. An heir can clear the remaining reverse mortgage if your home’s value is more than the mortgage balance.
Old homeowners can take a reverse mortgage to monetize their home equity. People who live in their homes aren’t required to pay the loan. Your house needs to meet certain property standards for you to get a mortgage loan. If you need reverse mortgage solutions, call Blake Mortgage via (480)699-1055. We have licensed mortgage experts who offer unlimited customer support to our clients.