A reverse mortgage is geared for senior homeowners in Phoenix, and it allows them to take equity out of their homes to support them with an extra means of cash flow. Equity can come in very handy for people who are retired and who are having to live on a limited income. A survey of older Phoenix residents taken in 2010 showed that 48% of them stated that difficulties with their finances was the primary reason for their application for a reverse mortgage.
Many people who are retired, do not have jobs or careers to draw on for income so that a reverse mortgage can be a boon to them in a time of need from a revenue standpoint.
It is called a Home Equity Conversion Mortgage (HECM), and the recipient has to be at least 62 years of age or older. Once the reverse mortgage arrangement is set up, any mortgage payments that are being made a stop, and the homeowner begins to receive a monthly check.
The consequence is that the owner begins to receive the payments, and the loan does not have to be paid off until the homeowner dies, sells the home, or moves out of the home. The borrower is still responsible for paying any taxes and homeowner’s insurance. Since there are no mortgage payments by the borrower, the interest on the loan will continue to accrue. Eventually, the interest can add up to be more than the value of the home, but the borrower (or the estate of the borrower) is not liable for any extra debt beyond the value of the home.
Before a homeowner can enter into a reverse mortgage transaction, it is required that the owner sits through a counseling session by a qualified HECM counselor. Which is to make simply the homeowner aware of the process and all of the particulars.
Once the reverse mortgage is established and set up, the owner will begin to receive monthly payments. There is no restriction on how the money is used, and the payments will continue until the homeowner dies, moves out of the home, or sells the home. If the reverse mortgage is in both names of a two spouses, and one spouse dies there can be repercussions, depending upon circumstances.
If a spouse is under the age of 62, or is not listed as a co-owner on the property, and the spouse that is listed on the reverse mortgage dies, the surviving spouse might have to sell the house to pay off the loan. So it is important to perhaps have life insurance in force on the reverse mortgage holder.
If both spouses are listed as co-owners, the surviving spouse will be able to continue the process in most cases which is why the homeowners must go through counseling to determine the suitability and the ability to understand any pitfalls that may apply to certain situations.
For most senior homeowners in the Metro Phoenix area, the reverse mortgage is an excellent program, as it gives a needed positive cash flow in their monthly budgets.