Reverse mortgage loans are a popular financing option for seniors in Scottsdale, Arizona, that allow 62 and older homeowners to tap into their home’s equity for increased cash flow in their golden years.
How Does a Reverse Mortgage Loan in Scottsdale Work?
A reverse mortgage loan allows homeowners who are 62 or older to access a portion of their home’s equity without having to sell their home, give up the title or make monthly mortgage payments. Instead, the borrower must pay property charges, like taxes, insurance and home maintenance. The loan is paid back when the borrower no longer occupies the home.
The amount that can be borrowed depends on several factors, including the borrower’s age, home value, interest rates and the type of reverse mortgage loan.
Borrowers have several options for receiving the funds, including a lump sum, monthly payments, a line of credit or a combination.
Our Reverse Mortgage Loans in Scottsdale, Arizona
Home Equity Conversion Mortgage (HECM)
Insured by the Federal Housing Administration (FHA), the Home Equity Conversion Mortgage (HECM) is the most prevalent type of reverse mortgage. The FHA guarantees that if the balance on the loan exceeds the home’s value when it’s sold, the borrower or the heirs will not be responsible for the difference (the FHA will pay it).** This can offer great peace of mind to people who worry about passing on debt to their loved ones.
HECM for Purchase (H4P)
Designed explicitly for seniors who wish to buy a new home, the HECM for Purchase (H4P) enables borrowers to use it for purchasing a new primary residence. The H4P can greatly increase homebuying power, sometimes up to 200%. This can enable seniors to move to more expensive areas or homes without having to drain their savings and start a new mortgage. Like a traditional HECM, there are no obligatory monthly mortgage payments, leaving the borrower to handle property charges like taxes, insurance and upkeep.
Jumbo Reverse Mortgage Loan
Jumbo reverse mortgages are intended for homes with high values that surpass the FHA’s HECM loan limit of $1,089,300. The amount of cash available is calculated based on the home’s assessed value, and borrowers generally have more payment alternatives to choose from than with HECMs. Note that jumbo reverse mortgage loans are not standardized and FHA-insured, which means terms and conditions can vary from lender to lender.
Scottsdale Reverse Mortgage Loan Benefits
People get reverse mortgages for many reasons, including:
Access To Cash
A reverse mortgage loan allows borrowers to access a portion of their home equity in the form of cash, which can be used to cover living expenses, make their homes more accessible, pay off debt or any other purposes that the borrower chooses.
No Monthly Mortgage Payments
With a reverse mortgage loan, borrowers are not required to make monthly mortgage payments. Instead, they must pay property charges, like insurance and taxes, and maintain upkeep. The loan is a non-recourse loan, meaning neither the borrowers nor the heirs will owe more than the home is worth when it’s sold, even if the real estate market is lower than when the reverse mortgage loan originated.
Long-term Care (LTC)
Many people use their reverse mortgage loan proceeds for healthcare-related costs. For example, if a homeowner needs to hire an in-home caregiver or pay for other long-term care services. This can be particularly helpful for seniors who want to age in place in their homes.
Portfolio Hedging
Reverse mortgage loans can be used as a buffer asset to protect investments in down markets. Instead of selling off investments at a loss, a borrower could use their loan proceeds to cover expenses until the markets recover.*
Realize Home Equity Gains
Home equity hit all-time highs in recent years, but without a reverse mortgage loan, most homeowners cannot benefit from equity increases without selling their homes. A reverse mortgage offers the ability to benefit from home equity appreciation while owning and living in the home.
Financial Flexibility
Borrowers have flexibility in how they receive their funds. A line of credit with guaranteed growth is a popular option (applies to unused funds), but borrowers can also choose a lump sum payment, monthly payments or a combination of these options.
Own and Live in the Home
Reverse mortgage borrowers retain complete ownership and can continue to live in their homes as long as they comply with the loan terms, which include using the home as a primary residence.
Government-insured
HECM reverse mortgage loans are insured by the Federal Housing Administration (FHA), which offers additional consumer protections, making it one of the safest loans available today.
Interested in a Reverse Mortgage Loan in Scottsdale, Arizona?
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*This advertisement does not constitute tax or financial advice. Please consult a tax and/or financial advisor regarding your specific situation. **There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.