Reverse Mortgage

Unlock your home equity and defer your monthly mortgage payment. Reverse mortgages can free up cash, adding to your retirement income and peace of mind.

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What Is a Reverse Mortgage?

Reverse mortgages work by taking out a loan using your home as collateral, similar to a traditional mortgage. However, unlike a conventional mortgage, you won’t make fixed monthly payments. This can improve your monthly cash flow, giving you money to spend on other things.

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Benefits of Reverse Mortgages

Unlike a home equity loan or line of credit, you will not need to pay back the reverse mortgage lender after a fixed period; you only pay back the loan when you move out of the property. This will allow you to remove some expenses from your budget, though you will still need to pay property taxes and homeowners’ association dues.

You have multiple options for receiving loan advances: some people choose to get all the money upfront, while others choose equal monthly payments in which the lender makes payments to them as if they were receiving an income. However, the federal government does not consider this income, so that you won’t be taxed on it. You will never need to pay back more than your home’s appraised value. These loan proceeds can help compensate for the loss in income for retirees, helping them stay ahead of the rising cost of living.

After you pass away, your heirs have several choices regarding the property. They can sell it, assume ownership, or refinance the property in their own name. In addition, since a reverse mortgage is a non-recourse loan, the heirs can also choose to let the property go if it’s not worth the amount owed.

Requirements for Reverse Mortgages

Only borrowers older than 62 are eligible for a reverse mortgage. If you have co-borrowers, the youngest borrower must be at least 62. The home must be yours outright, or your existing mortgage must have a low balance. You also cannot have any federal debt, such as student loans or unpaid federal income taxes.

Before you take out an HECM loan, you must speak to a reverse mortgage counselor from a Housing and Urban Development (HUD) approved counseling agency. You’ll have to prove that you have money to pay ongoing housing expenses, like the homeowner’s insurance, taxes, and HOA dues.

Why Choose Arnaiz Mortgage

We want every reverse mortgage borrower to feel confident about their choice, so we’ll work closely with you to ensure you understand all the moving parts of this unique financial process.

While most reverse mortgage borrowers choose a home equity conversion mortgage (HECM), reverse mortgage options vary. We’ll help you pick the right one for you – whether that is a proprietary reverse mortgage or a single-purpose reverse mortgage. You can be assured you’re making the right decision and are fully informed by a financial advisor about the obligations of a reverse mortgage.

We have access to some of the most competitive rates in the business, ensuring you don’t pay more than you should.

Frequently asked questions about Reverse Mortgage

  • How Do I Choose Which Type of Reverse Mortgage to Use?

    Most reverse mortgages are home equity conversion mortgages (HECMs), which are managed by the Federal Housing Administration (FHA), have borrowing limits, and are insured by the government. However, there are several other types of reverse mortgages, and our loan officers can help you choose the product that best suits your needs.

    Single-purpose reverse mortgages are an agreement between you and a lender: they will take some of your home’s equity and provide you with a single payment for a specific purpose, typically paying off another creditor.

    Proprietary reverse mortgages, unlike HECMs, are not bound by the requirements of the FHA because private lenders provide them. These are sometimes called “jumbo reverse mortgages” because they can go above FHA limits and allow you to take out much more.

    The requirements for a reverse mortgage depend on the type you are using, and we will help you explore your options.

  • Why Do I Need Counseling Before Receiving a Reverse Mortgage?

    Before obtaining an HECM, every borrower must complete a HUD-approved counseling session. This ensures that the borrower understands all the components of a loan advance and is prepared to borrow wisely.

    The housing counselor will answer all your questions, such as “How does a reverse mortgage work?” and “Do I still have to pay my homeowner’s insurance?” Our team can also assist you with all the steps of the process and ensure you’re familiar with all aspects of this product.
    What Does a Reverse Mortgage Cost?
    The cost for a reverse mortgage varies based on what lender you use. If you choose an HECM, you must pay closing costs, which cannot be more than $6,000. You also must pay for a counseling session with a HUD-approved agency. Additionally, you will pay an upfront mortgage insurance premium and annual mortgage insurance premiums for as long as you have the loan.

    Our team at Arnaize Mortgage will help you sort through the expenses involved with a reverse mortgage offer, such as closing costs and service fees.

  • When Do I Have to Pay My Outstanding Loan Balance?

    The balance generally becomes due when a borrower moves out of the primary residence or dies. However, the borrower still needs to keep the house in habitable condition. If they fail to do so, the lender can call in the mortgage, and the balance will be immediately due.

    It’s important to note that even though you’re not making monthly mortgage payments, there are still costs associated with the loan. There will be a rising loan balance based on interest rates and servicing fees. That’s why keeping track of your reverse mortgage is essential so you know what to expect when it comes due.
    What Happens When Reverse Mortgage Borrowers Pass Away?
    When the borrower passes away, the reverse mortgage proceeds to the repayment stage. The estate’s heirs will decide whether to pay it off, sell the property to satisfy the reverse mortgage or allow the lender to repossess it.

  • How Do I Avoid Reverse Mortgage Scams?

    The Consumer Financial Protection Bureau notes that the best way to avoid scams is to talk to multiple lenders and compare their products, just as with a conventional mortgage. Loan officers who sell reverse mortgages are not allowed to sell you any investments, and you shouldn’t use the loan money to make investments or pay annuities.

    Decide for yourself: don’t be swayed by contractors or family members encouraging you to take out money they could use for their own needs.