When you are young, it is easier to qualify for a home loan. As you age, it becomes harder to get off the home mortgage. For senior citizens, they experience cash-flow problems. Owing to this, they experience problems settling the existing home mortgages, leave alone paying off their medical bills. That is where reverse mortgage Arizona comes in.
For hundreds of American senior citizens, they are still not convinced that Home Equity Conversion Mortgage can help finance their living expenses. There are a couple of questions to ask about the reverse mortgage. In this post, we feature some frequently asked questions, relating to reverse mortgage.
- What is a reverse mortgage?
As the name suggests, a reverse mortgage Arizona is the opposite of the conventional mortgage. Instead of the bank giving you money to build or buy a home, you are giving your home to the bank and they give you a loan. The amount you borrow against the house can be paid as a monthly check to ease your cash flow or as a lump sum, depending on your preference.
Therefore, a reverse mortgage is a wonderful option for senior citizens who are above 62 years of age. The Federal Housing Administration secures the reverse mortgage. To apply, visit a registered reverse mortgage lender in Arizona, and fill in the application forms.
- How does a reverse mortgage work?
Reverse mortgage Arizona allows homeowners aged 62 years and above to access a portion of their home equity. The percentage rendered by the reverse mortgage company is based on the age of the youngest borrower. Unlike the conventional home loan, the property owner is not expected to make monthly repayments. In essence, the loan is supposed to help senior citizens make ends meet especially now that they do not have a monthly paycheck.
The reverse mortgage is a tax-free Home Equity Conversion Mortgage and can be spent on virtually anything, including paying for a vacation. The amount is repayable when you vacate the house or upon the death of the borrower.
- Do you lose homeownership rights upon taking the reverse mortgage?
When you take the reverse mortgage, you do not lose the property ownership rights. In fact, the bank cannot take away the homeownership rights for any reason, until such a time when you stop living in that home, or upon death. However, as the property owner, it is your obligation to continue paying for all the property taxes and home insurance. In case any of these falls due, the lenders might decide to accelerate the reverse mortgage, making the whole amount due. Therefore, this leaves you for foreclosure, and so you have to maintain catering for these expenses.
- How Can I Repay the Reverse Mortgage?
The major difference between the reverse mortgage and other conventional loans is that you do not have to make the monthly repayment installments. The lender allows you to make voluntary repayments. Alternatively, you can repay the loan in full by selling off the property and using the full amount to settle the outstanding mortgage amount.
- The property market is on the decline and I want to settle the reverse mortgage. What happens to the difference?
The Federal Housing Administration secures reverse mortgages. Therefore, if the reverse mortgage balance is larger than the home sale price, the borrower of the FHA version of the reverse mortgage enjoys extra protection. The HECM reverse mortgage believes that the borrower is responsible for the amount that the property sells for. Therefore, even if the loan balance is more than the amount that the property sells for, the FHA caters for this deference. Therefore, there is no need to worry about declining property properties. So long as you had taken the FHA secured HECM.
- Can I make monthly repayments on a reverse mortgage?
One of the benefits of a reverse mortgage is that the borrower is not obligated to pay the monthly repayments. However, if the borrower chooses to make the monthly repayments, then the bank will be willing to take the reverse mortgage monthly repayments.
- Can I get a reverse mortgage if I have bad credit?
To qualify for a reverse mortgage, the lender does not consider your credit report. Therefore, even if you have a bad credit report, you can go ahead and tap on home equity. So long as other requirements are fully met, you will be approved for the reverse mortgage.
A reverse mortgage is a good option for senior citizens who are looking for a way to improve their cash flow. Before applying for a reverse mortgage, ensure that you have read the reverse mortgage requirements. Remember that you can only apply for the amount that is within your home equity, after paying off the loan fees.