When planning for retirement, a reverse mortgage can be a powerful earning tool for seniors who need a little bit of extra income. There are dozens of ways it can effectively supplement one’s income but understanding how it works can be a little complicated. If you or anyone you know is planning to apply for a reverse mortgage in Phoenix, take a look at these benefits before jumping the gun.
What is a Reverse Mortgage?
A reverse mortgage gives homeowners the opportunity to access their home equity in the form of monthly payments. It allows seniors above the age of 62 to have access to cash or credit in order to supplement their income during their retirement years.
- You get to remain the owner of your current home
Though a reverse mortgage is technically a loan, your lender doesn’t become the owner of your current home—you still are. Nothing changes so long as you’re able to comply with the terms of your loan and pay property taxes alongside home insurance.
- You won’t need to pay monthly mortgage
As its title suggests, monthly mortgage payments are made foryou instead of the other way around. That is given, of course, that you continue to live in your current home or that your fellow borrowers remain in it. You will, however, remain responsible for property taxes, home insurance, and other maintenance fees. You can pay off your loan once you sell your home to move to another residence or when the last borrower leaves the home.
- You’re protected in case the housing market crashes
The value of homes is subject to change over the years due to fluctuations in the stock market, sometimes regardless of the building’s condition. Because a reverse mortgage is insured by the federal government, you get the added security of your government insurance covering the difference should your loan exceed the eventual value of the home. You’ll be able to pay off your loan using only the proceeds that your home currently sells for without having to worry about the amount spiking.
- You’ll have various options for disbursement
As your needs vary, disbursement options are flexible. Depending on what you’ll need the income for, you can receive it in either a full or partial sum to your line of credit or in monthly cheques. If you aren’t sure about which option will suit your needs best, feel free to sit down with one of our Phoenix loan officers at Desert Springs Mortgage.
- You choose the length of your loan
How long your loan lasts will depend on how you choose to receive the amounts. As previously mentioned, you can receive it in a lump sum or in monthly installments for a set term for as long as you remain in the home as your permanent residence.
Reverse Mortgage in Phoenix by Desert Springs Mortgage
We’ll be the first to admit that reverse mortgages can be difficult to comprehend. However, they remain a powerful financing tool for seniors without any other source of income to enjoy their retirement.
To learn more about reverse mortgages in Phoenix, give us a call at Desert Springs Mortgage. We can provide you with all the right resources you need to get started!