Understanding the Reverse Mortgage and How to Use It to Tap into Home Equity

There are a variety of mortgage products out there that serve the needs of different homeowners, but it can be hard to know what will work best for you. If you happen to be close to retirement and are looking at options that may be more financially beneficial for you, here are the details on a reverse mortgage and how this product can work for you.

The Details On A Reverse Mortgage

The reverse mortgage was created in 2009 as the Home Equity Conversion Mortgage for Purchase (HECM) following the 2008 recession. While this type of mortgage is only available to homeowners who are 62 or older, it offers a way for people to tap into the equity of their home so that they are not required to pay monthly mortgage payments. There are limitations imposed on this product, but this can be useful, as long as all risks and terms of the mortgage are understood.

What’s Required To Apply?

In order to utilize this mortgage product, the homeowner must have paid off their property entirely or have a significant amount of equity in their current home. As people who want to use a reverse mortgage will have to go through a credit check, they will have to be able to prove that they have the ability to pay for all the fees associated with home ownership. This can include common expenses like insurance, property tax and any other applicable charges that come with a monthly mortgage payment.

How You Can Use It

A reverse mortgage can be confusing to understand.  It is intended for those who want to receive monthly payments, get a lump sum payment from their equity or even access a line of credit, or just as a means of tapping into additional funds.  This means that the overall loan balance of the mortgage will increase over time due to interest.  Also, insurance may not be paid consistently.  The reverse mortgage assumes that these expenses will be taken care of once the owner has passed away and the property can be sold or the loan balance is paid by heirs.

A reverse mortgage can be a beneficial product for homeowners nearing retirement, but it’s important to be aware of the associated costs and risks involved to determine if this product is beneficial for you.  For more information, give me a call – J.P. Cook – 602-320-4253.

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2101 W Shelly Avenue Apache Junction, AZ 85120

$459,990

4 Beds

2.5 Baths

2,051 SqFt

Status Active

MLS # 6688460

Property Type Single Family Residence

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Welcome to Radiance at Superstition Vistas, a brand new master planned community located on the border where Mesa meets Apache Junction. This is a rare opportunity for optimal living - to have the convenience of City living while enjoying the breathtaking Superstition mountains! Small town feel meets modern amenities at its best! The Hanna 2052 sq ft, 4 bed/2.5 bath adorable, energy efficient home in which you will find tile in all common areas, 9 foot ceilings and on trend extra bright white walls.. Located close to the 24, 60 & 202.

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3339 S 177th Drive Goodyear, AZ 85338

$459,990

3 Beds

2 Baths

1,971 SqFt

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MLS # 6694772

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Welcome Home! This cozy single story home features 3 bedrooms plus study, 2 bath, 2 car garage and a Double Gate to backyard! Open kitchen, dining and great room area. Extended Covered Patio expands to a glorious outdoor space to create the oasis you've always wanted! Interior has 9ft ceilings, 8 ft interior doors, shaker style white cabinets, stainless steel appliances, granite countertops, wood look tile floor throughout and carpeted bedrooms. Conveniently located near shopping and dining options. You won't want to miss out on this one!

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7417 W Northview Avenue Glendale, AZ 85303

$459,990

3 Beds

2.5 Baths

1,986 SqFt

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MLS # 6666090

Property Type Single Family Residence

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This home is our Concerto plan with 3 bedrooms, 2.5 bath home. The kitchen is beautifully designed with 42-inch grey cabinetry, Quartz counters and stainless-steel appliances. The adjacent great room includes a multi-slide door extending perfect for indoor/outdoor living. Upstairs a generously sized loft is perfect for additional living. The Primary Suite features a large bath with shower a huge walk-in closet. Don't miss this home! ^^^Up to 6% of Base Price can be applied towards closing cost and/or short-long term interest rate buydowns when choosing our preferred Lender. Additional eligibility and limited time restrictions apply.

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21571 W Papago Street Buckeye, AZ 85326

$459,990

4 Beds

3 Baths

2,012 SqFt

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MLS # 6671550

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Spacious Larkspur plan that has 4 bedrooms, 3 baths. It has a 12x8 sliding glass door off the great room. Stainless steel electric appliance package with microhood. Tahoe Maple Boulder cabinets throughout the home with 42'' kitchen uppers and a pull out trash drawer with two bins. AZT Granite Bianco Typhoon in kitchen with a stainless steel single bowl kitchen sink. Upgrade flooring includes EMS Solara Yaris 20x20 in all areas of the home except bedrooms and closets. Dual sinks at bath 2, soft water loop, garage door opener two remotes, 8' tall garage doors for those high profile vehicles, garage service door for easy access into the backyard and more. Estimated completion in May.

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