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The Ultimate Guide to reverse home mortgage

The Ultimate Guide to Reverse Mortgages

When my friend, Tony started to reach his mid 50’s, the old back injuries he’d sustained decades ago, playing college football, started to flare up & get worse. Patrice, his wife, had been in Healthcare for her whole career & just knew as they got older & injuries & age caught up with them that they’d end up forking over quite a bit of money to pay for medical bills. They’d done what most Americans do, & had a good career & funded a 401K for a few decades, but the reality is, it’s just not enough when you factor in health issues & unexpected expenses. They knew they needed extra financing and chose to get a Reverse Mortgage. They planned to find financial backup so that they could be prepared for anything that might come up.  

 

Likewise, if you’re hitting your retirement years and you don’t want to, or can’t touch your lifetime savings yet, a reverse mortgage might be a lifesaving option for you like it was for Tony & Patrice.  

 

Let me explain a little more what a reverse mortgage is, and how it works. 

What is a reverse mortgage?

  • A reverse mortgage is an FHA insured loan allowing homeowners who are 62 years and above to get financing with no monthly repayments.  

Seniors can take advantage of a reverse mortgage and pay off a normal mortgage or use the equity in their home to finance their retirements.  

While a Conventional loan lets the homeowners access funds to purchase a property, a reverse mortgage works oppositely.  

This means that a reverse mortgage will let you withdraw a portion of the equity in a property that you already own, & there’s no repayment required on the reverse mortgage provided the homeowner keeps living in that property. 

How Does a Reverse Mortgage Work?

  1. How much can you borrow?

Although we’ve explained that reverse mortgage allows you to borrow against your home’s equity, you may not be able to borrow the full value of your property! But don’t let that discourage you, our friendly & knowledgeable Loan Officers go out of their way to find as many options as they can to help you get the financing you need. 

 

The amount that can be borrowed depends on the following: 

 

  • Current interest rates 
  • Age of the youngest borrower or the eligible nonborrowing spouse 
  • The appraised property value 
  • The FHA set reverse mortgage limit 
  1. How will the amounts borrowed be paid out?

The options for how to accept the borrowed funds vary depending on a few things. If the homeowner opts for a fixed interest rate, then they’ll be limited to receiving a single disbursement or a lump sum payment. 

 But if you chose a reverse mortgage with a variable interest rate, then some of the options include: 

  • Equal monthly payments so long as the property is a primary residence or at least one of the homeowners live in the property.  
  • Equal monthly payments for a fixed period of months that can be agreed upon ahead of time 
  • Choose a line of credit until the amount is exhausted 
  • Combination of line of credit plus fixed monthly payments for a set length of time  
  1. Reverse mortgage repayment info

The money borrowed via a reverse mortgage does not need to be repaid until the homeowner has passed on, or when the homeowner lives away for a period exceeding nine months or opts to move out.   

Note that the homeowner is protected from paying more than the amount borrowed in case the property value increases.  

If the property value at repayment time is higher than the amount borrowed, you or your heirs can keep the difference.  

What Do I have to do to Qualify for a reverse mortgage?

Now that you understand a little better what the reverse mortgage is, you’re probably wondering how to apply for one.  

Like I mentioned above, you do need to be 62 or older, but even if your spouse isn’t 62 yet, you can still apply for one!   

There are some additional requirements, such as: 

 

  • Prove that you own the property outright 
  • Agree to pay off any outstanding mortgage balances 
  • Property must be your primary residence and remain your primary residence. 
  • Keep up on the property taxes, homeowner’s insurance premiums, resident association fee’s and other obligations, such as maintenance & whatnot. 

What Makes a Reverse MOrtgage a Better Option compared to different housing loans?

  • The borrower is not obliged to make monthly repayments towards the loan balance
  • The funds can be used on different living expenses, as debt repayment or even paying your healthcare expenses 
  • It is a convenient option if you are looking for the best approach for financing your retirement
  • Non borrowing spouse is allowed to live in the home after the borrower is dead
  • Enjoy quick disbursement, as requirements are less strict compared to conventional Utah home mortgage options

Are you looking for the best Reverse home mortgage lenders in Utah? Come to Staples Group for quick and efficient reverse mortgage application process.

8 Reasons Why You Should Choose a Conventional Home Mortgage (#2 is our FAVORITE)

Whether you’re looking to build a new home or refinance your existing one, you’re going to come across lots of different loan types in the process. The one I’d like to recommend is a conventional loan. You can even get a Conventional Loan right here in St. George, at Sun American Mortgage!

You’re probably wondering how getting a Conventional loan will benefit you, right? Well In this post, we feature many of the benefits a conventional can give you, as well as how you can get one!

What is a conventional loan?

A conventional loan refers to a loan type that is not backed by government agencies. The conventional home mortgage conforms to standards set by Fannie Mae and Freddie Mac, the largest buyers of mortgage loans here in the US. 

Conventional loans fall under two subcategories. These are conforming and non-conforming loans. Conforming loans follow the guidelines that are set by Fannie Mae and Freddie Mac. There are several kinds of non-conforming loans, the most common being jumbo loans, (because they are borrowing a loan amount higher than the limit set for that area) are for those that don’t qualify for a Conforming Loan.

Some examples of home loans backed by government agencies include an FHA (Federal Housing Administration) and the VA (Veteran home loan). A conventional loan can be a great low-cost option for first time home buyers who are looking for better alternatives. 

1. Enjoy as low as 3% down payment

A conventional loan is available at 3% down as opposed to the industry standard of 20%. Like I mentioned above, this is a huge reason why going with a conventional loan is a great option for first time home buyers. Some people can’t wait till they have that 20% saved up, so if you need to get into a home sooner than later, a conventional is your friend.

2. Avoid paying monthly mortgage insurance

One of my favorite features of conventional loans is that you don’t have to pay any monthly Mortgage Insurance. I do want to urge a caution of warning though, there is a slight catch. This benefit only applies if you put the standard 20% down. If your down payment is less than 20%, you’re still going to have to pay for monthly insurance. I’d still recommend getting a conventional loan, because let’s say you only put down 3% and get into your dream house. You’ll have to pay the monthly mortgage insurance until your loan to value ratio reaches 80%. If you are refinancing your already existing Mortgage, you can choose to go conventional and save some money. This means that if you have an FHA or VA loan, you can transition to conventional when you refinance & eliminate that pesky mortgage insurance.

3. The convenience and flexibility to be applied if building different property types

For most government-sponsored loans, they’re going to limit you to building only for a primary residence. If you’re interested in building a whole complex, investment property, or vacation home, The Conventional loan is  going to allow you to do that.  Government loans have different restrictions for those property types. Going Conventional gives you more freedom! Of course, you can still build a primary residence with a Conventional Loan, but for someone with an investment mindset and would like to earn some rental income from the property, a Conventional Loan is a solid option & worth pursuing.

4. Conventional loan borrowers can choose adjustable-rate or fixed-rate loans

Depending on the plans for the property, you can either be qualify for an adjustable rate, or fixed-rate loan. Many prefer to go for the fixed-rate option for the security of knowing your interest rate will be fixed for the life of the loan. The adjustable-rate option allows the you to enjoy a lower rate on a conventional loan for a time, but your payment may increase/decrease over the life of the loan.

5. We Close on-time

Here at Sun American Mortgage, we always close on time! So long as you’re meeting the requirements & there’s no hiccups that are out of our control, Conventional loans are processed faster compared to government-backed mortgages. 

Cons associated with applying for a conventional loan:

6. The terms and conditions are stricter compared to the FHA and VA home loan options.

Since they aren’t a government backed loan type, there are stricter guidelines to qualify. Fannie Mae & Freddie Mac decide how and when they like to lend their money and they choose to have guidelines that protect their investments. It makes sense why they need to be more careful, but it’s just something to keep in mind during the qualifying process! Just because this is the case, don’t let it scare you away though! Our team here at Sun American Mortgage will always explore all of your options to get you into your dream home. We’re all about helping families over here, & that’s a guarantee!

7. The decision on conventional loan qualification is entirely made by the lender.

I promise it’s not as scary as you think! It just means if you’ve had a recent foreclosure in the past, it may limit what your options are when qualifying for a home loan. But isn’t that the case with every loan? Our team is going to do everything in their power to get you in your dream home though & there’s a lot of options that can help in those situations.

8. If the borrower cannot afford the 20% down payment, they have to cope with the requirement to pay the mortgage insurance.

Like I mentioned in paragraph 2, this is my favorite thing about Conventional loans. Yes, you’ll need to have saved the industry standard of 20% to enjoy not paying Mortgage Insurance. But!! If you don’t have 20% to put down, you can still get a conventional loan & later refinance to get rid of that Mortgage Insurance.

Come talk to Sun American Mortgage in St. George (home loan) today for any of your Mortgage needs! We love helping families getting into the homes of their dreams! After all, were all about Changing Lives One Home at a Time.

Low Down Payment Options: What We Learned After Analyzing TONS of Mortgage Loans!

USDA Home Loan in Utah

Saving enough money to afford a high down payment for a home purchase can take a long time. Luckily there is an option of mortgage loans with a low down payment, to no down payment. The typical required 20% down payment is outdated. New homebuyers have been taking the low down payment loans and the experience has been not just enjoyable, but a huge financial relief.

In this post, we share what we learned after analyzing the home loan options available at Sun American mortgage.

1. FHA Programs

FHA home loans are designed to favor the low to moderate-income earners, which allows new homebuyers to take advantage of the lenient credit score requirements. An FHA loan only requires a 3.5% down payment & has more flexible qualification guidelines.
If you can’t qualify for the traditional mortgage loan types, FHA is a good alternative, thanks to the FHA guarantee. At Sun American Mortgage, you can get approved for an FHA loan if you have a decent credit score with at least 600s and can afford a low down payment of 3%. Compare to a more traditional mortgage guideline, where the loan applicant is expected to reach a credit score of 700-plus and a high down payment of as much as 20%. So, if you are in search of the best low-down payment, FHA home loans have got you covered!

2. Rural USDA Home Loan

This type of loan is available to those looking to purchase a home in the rural or suburban areas. This loan is typically offered a little outside of the St. George area to be considered rural. It’s available at no down payment, hence a low investment mortgage. Backed by the U.S. Department of Agriculture, the loan is designed for aspiring homeowners who are looking to buy outside of a large urban area. It allows you to renovate, build, improve or relocate your primary residence, within the eligible rural areas. This type of loan is available for 30-year fixed rates only. We also give you flexible qualification guidelines, giving you access to 103.5% of the appraisal value. A USDA mortgage requires an upfront guarantee premium and low rate monthly mortgage Insurance. If you are wondering whether you can qualify for a USDA rural home loan, come talk to one of our friendly loan officers will help you through the loan application process.

3. Utah Housing Loan

The Utah housing loan gives loan applicants access to a zero-down payment, offering flexibility to qualified first-time homebuyers. If you are a first-time home buyer in Utah and you meet the income and other eligibility requirements, you can get approved for the Utah Housing loan. This option provides a 30-year mortgage at a competitive interest rate and is available at Sun American Mortgage! However, the loan applicant is expected to live in the home and cannot purchase it as a rental property. Also, the borrower’s credit score should reflect an ability to pay bills on time, with a score of at least 620.

4. Veterans Home loan

The Veterans Administration home mortgage allows qualified members to access affordable home financing. This loan gives home buyers access to a zero-down payment as well, offering flexibility to qualified first-time homebuyers, so long as the home buyer is a veteran or the spouse of a U.S Vet. If you are a veteran and first-time home buyer in Utah and you meet the income and other eligibility requirements, you can get approved for this loan. This option allows a 30 year mortgage at a competitive interest rate and is also available at Sun American Mortgage! Again, the home buyer is expected to live in the home & cannot purchase it as a rental. Credit scores need to be at least 620 to be eligible for this loan as well.

If you are curious whether you can qualify for any of the home loan types mentioned above, then feel free to come talk to one of our friendly loan officers today! We would be happy to answer any questions you may have & will help you through the loan application process in a breeze.

Warning! Don’t Get a Reverse Mortgage Until You Read This!

If you live in the United States, you are aware of the rising cost of medical care, living expenses and increasing limitations on social security. Unfortunately, many people reach their retirement age without enough money to fund their retirement years.

Back in the days, if you borrowed money using your home, you had to pay monthly loan payments. Today, homeowners can opt for a Reverse Mortgage, where you can convert your home’s equity into a tax-free income.

So, what is a Reverse Mortgage, & how do they work?

To give a little history, the Reverse mortgage was launched by the US Department of Housing and Urban Development, in the year 1990.

A reverse mortgage refers to a type of loan available to qualified homeowners 62 years old & up, who are willing to convert their home’s equity into cash. This is a great financial solution for retirees. This type of financing is usually tax-free as well.

The homeowner retains full entitlement of the property against which the loan amount is borrowed. The Homeowner is still responsible for clearing property taxes, and other utility bills, as well as the property maintenance costs.

If an applicant meets the minimum requirements for the reverse mortgage, there are three different disbursement options, which are: receiving a lump sum, opting for the line of credit, or monthly repayment plans.

The total loan amount is due when the borrower of the reverse mortgage has passed away, or stopped living in the home for 12 or more months, or has opted to sell the property. If any of those circumstances end up happening, the homeowner is expected to pay back the loan. There are some alternative solutions if you wish to get rid of your Reverse Mortgage at any point. One can sell the property or refinance through different Utah housing loan types.

The advantage of taking the Reverse mortgage financing is that, so long as the homeowner continually meets the requirements, no monthly repayments will have to be made.

So, how much can a loan applicant qualify for?
The homeowner’s age determines the amount they can borrow. The amount of home equity they have available and your current interest rate can affect this as well. Note that you are not allowed to use more than 80% of the total home equity.

How do I qualify for a reverse mortgage?

  • Must be at least 62 years old.
  • Proof of outright homeownership, with a low remaining Utah housing loan, that can be paid off at the closing of the Reverse Mortgage. 
  • Show that the property is your primary residence.
  • Attend a complete financial counseling session, by a qualified HUD-approved professional. Illustrate that you can meet the other financial obligations. 

The HECM home requirements 

  • The home you are borrowing money against is either a single-family home or a two-to-four-unit home.
  • The loan applicant is the property owner. 
  • It is a HUD-approved home or condominium and meets the FHA requirements. 

Let’s say you got a Reverse Mortgage & have borrowed money against your own property. Since a Reverse provides you with a tax-free income, there is no restriction on how to spend the cash. Retirees can choose to offset existing loans, or even fund their vacation using the borrowed money. In other words, the lender has no control over where you use the money. There are so many more reasons why a Reverse Mortgage is a great decision! 

Get Your Reverse Mortgage Questions Answered by Contacting Our Expert Below!

Nan Glauser | Loan Officer | 435.229.6914 | NMLS# 1119710

3 WAYS TO REVOLUTIONIZE YOUR CREDIT IN 2016

#1 Call and tell your lender to get rid of your mortgage insurance!! 
Even if your down payment was less than 20% when you purchased the home, you may now have the equity needed to remove the insurance. You can call your mortgage service an in less than 30 minutes to find out just what is needed to remove your mortgage insurance!\

Cut your monthly expenses!

#2 Pay down your principal
Tax returns, yearly bonuses or inheritances are great ways to reduce your mortgage payment. Although it won’t affect the payment itself (other than reducing your mortgage insurance payment, as described above), the smaller your loan to value (LTV), the sooner you can shake your mortgage insurance completely. It may take a couple of years of turning your tax refunds over to the mortgage company, but it’ll save you a big chunk each month to be free of mortgage insurance.

Be aware that this only really works with Conventional loans, if you have an FHA loan you can refinance into a Conventional loan product once you’ve reached the right LTV. On a Conventional loan, you can drop your mortgage insurance entirely when you reach 80 percent LTV. Even if you don’t quite have 20% equity in the home your mortgage insurance can be reduced based on what you owe versus value of the home.

#3 Refinance your mortgage 
Most homeowners do not know that sometimes even a .25% drop in interest rate can save them hundreds or even thousands of dollars per year. According to Bankrate.com more than 40% of all existing mortgages could be refinanced to a lower interest rate to reduce the monthly payment. The good news is you may not have to start your mortgage again either. You can choose from 10, 15, 20 and even 30 year loan terms.

#4 Shop your home owners insurance

The easiest way is to go out and get new quotes from different insurance companies — this is pretty straight-forward. Buy the policy with the best price and comparable coverage and drop your old one (but don’t forget to tell your lender, who your new insurance company is!)

Searching for a mortgage can be tricky. Call me and we find the best loan for you!

435-216-3081

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