One of the best way’s seniors can establish an income stream even after their retirement is through a reverse mortgage. It is not only good for seniors looking for income, but those who have experienced unexpected financial problems. Given the instability of current global circumstances, you might need to consider such a mortgage.
What You Need to Know About Reverse Mortgages?
To help you with that, we have compiled a list of the most questions people ask about these mortgages. Here are some of these questions:
- What is a reverse mortgage? A reverse mortgage is an option to homeowners aged 62 and above to borrow against their home’s equity without having to make monthly mortgage payments. They can choose to receive funds in a lump sum, via a line of credit, or through structured monthly payments. This loan is repaid when the last surviving borrower passes away or vacates the home permanently. Whatever equity remains in the home belongs to the heirs if the borrower has passed away.
- Why is it called a “reverse” mortgage? A traditional mortgage involves a borrower taking out a loan for a house. As this debt is repaid, the borrower will own more and more of the house. The reverse mortgage operates in the opposite direction. As the borrower receives more and more, their portion of house ownership will grow smaller and smaller. In both cases, interest may still accrue on the loan.
- Who could benefit from a reverse mortgage? As global economic circumstances shift and change, so too does the financial capacity of a person on a fixed income. Couple that with unexpected financial pitfalls, and it could spell disaster for any retiree. A reverse mortgage is a fantastic option right now for those wishing to cover basic expenses, while still enjoying the comforts of their home. Even if you haven’t experienced dire circumstances, you could certainly use the funds you gain from a reverse mortgage as additional income, even more so if you have no plans to leave your house to anybody.
- Is there anything I should watch out for? One thing people need to remember is their property taxes and insurance. When making traditional mortgage payments, property taxes and insurance are usually included in the mortgage payment. Switching to a reverse mortgage does not waive the responsibility of taxes and insurance. Property taxes and insurance are only billed a few times a year in large amounts, so if you have a reverse mortgage, it is important to plan your finances well so that you will be able to when the time comes. Missing these payments can lead to a defaulted mortgage or even foreclosure of the property.
Reverse Mortgages with Desert Springs Mortgage in Phoenix
Depending on your circumstances, a reverse mortgage may or may not be the best option for you. It is definitely a viable option for those looking to supplement their income with a stable income stream while still living in their home. You would not have to sell your home and downsize your lifestyle. You would be able to enjoy it until the end of your life, or until the day you decide to move out.
If you’re thinking about a reverse mortgage in Phoenix, send us at Desert Springs Mortgage a message. We have fantastic deals and rates for all retirees wishing for a little help. Call us now at (623) 432-1309!