If you live in Maricopa County Arizona and would prefer to have us setup an in-person meeting with you at your house we’ll be happy to schedule a time to come by and speak with you and your loved ones about how a reverse might help you.
If you prefer to speak with someone right now on the phone about how you can use a reverse mortgage to purchase a house, please feel free to contact us by phone 602-535-2171 or you can email us at team@azmortgagebrothers.com and we’ll go over everything you want to know.
To determine if this product is right for you there are a few things to consider:
This must be your primary residence
One borrower must be over the age of 62
When you purchase your next home do you have the ability to put a down payment of 50% or more?
Are you on any needs-based programs? A reverse mortgage is not considered income but if you hold your equity in a checking/savings account it will be considered an asset that may limit your qualification
Some of the reasons this may be the right program for you:
You wish to downsize from your current home to one that requires less maintenance
You wish to move to a single-story home or one that is more equipped for aging in place.
Is your income fixed and it is difficult making ends meet if you pay rent or a mortgage?
Do you need to move closer to support systems, family or friends?
Property types that qualify:
Single family homes
Planned unit development
2-4 unit properties
HUD approved condos
All new construction (Must have COO prior to transaction)
Certain types of manufactured homes (built after 1976 and HUD compliant)
A reverse mortgage purchase is much like a regular reverse mortgage, let’s go over the basics.
A reverse mortgage is what is called a non-recourse mortgage, meaning, you will never owe more than what your home is worth.
You always retain ownership of your property, the bank does not take your deed.
You will need to pay the taxes, insurance and maintain your home.
You will never have a payment.
Your heirs can purchase the home from the mortgage company for 95% of the appraised value. They can also sell the home and any equity is theirs to keep.
You may choose to make a full or partial payment each month to slow the growth of the loan.
Cons
Borrower must be able to cover the down payment. The requirement is significantly higher than a traditional purchase.
The down payment is based on:
- Age of the youngest borrower
- Current interest rate
- The price of the home (subject to HUD lending limits)
Some gifts may be allowed under FHA such as, family gift from those that do not have stake in the transaction, cash on hand (401K, savings)
Down payment is typically 50% of the purchase price
Fees, even though they are not paid out of pocket, the cost can be high.
The largest fee is the Upfront mortgage insurance premium (UFMIP) which is generally 2% of the property value. This insures the borrower and the lender against the risk of default, but it also ensures that borrowers and their heirs will never have to pay back more than the property is worth, regardless of the how high the balance increases or if future property values fall.
You will also pay .50% on the balance monthly as a mortgage insurance premium.
Reverse mortgages are not assumable by a family member and the balance is due upon the passing of the last surviving spouse or eligible non borrowing spouse.
Pros
You get stay in your home with a guarantee that you will never have to make another mortgage payment.
No matter what happens to the value of home prices, even if home prices decline your reverse mortgage and your guarantee will not be affected
You will always hold title 100% and will always have control as long as you live whether you want to stay in the home or sell it. No one will ever be able to tell you that you need to sell.
There are typically 3 things that happen which are frequently not taken into consideration when planning for retirement:
- Taxes
- Inflation
- Market Volatility
These three things alone can cause people to live out their lives in a not so golden way. A reverse mortgage can help. Social Security only goes up about 1/3 of inflation, you may be sitting under the roof of your best asset.
Example of a Reverse Mortgage Purchase
John and Jane Doe own a home free and clear that today is valued at $1,000,000.00. It is a lovely home, but all the bedrooms are upstairs, making life difficult.
One day they see the new development of their dreams and it has 1 story homes for $750,000.00.
They buy the home for $750,000.00 and decide to put $400,000.00 down and use a reverse mortgage for the balance of $350,000.00
The Doe’s can put aside approximately $500,000.00 (after paying closing cost on both homes) in their savings account for future travel or pay for their grandson’s college education and they still have no mortgage payment.
Want to start the process?
We are licensed in the whole state of Arizona to help borrowers who want a reverse mortgage. If you live in Maricopa County Arizona and would prefer to have us setup an in-person meeting with you at your house we’ll be happy to schedule a time to come by and speak with you and your loved ones about how a reverse might help you.
If you prefer to speak with someone right now on the phone about how you can use a reverse mortgage to purchase a house, please feel free to contact us by phone 602-535-2171 or you can email us at team@azmortgagebrothers.com and we’ll go over everything you want to know.