Understanding the Reverse Mortgage and How to Use It to Tap into Home Equity

There are a variety of mortgage products out there that serve the needs of different homeowners, but it can be hard to know what will work best for you. If you happen to be close to retirement and are looking at options that may be more financially beneficial for you, here are the details on a reverse mortgage and how this product can work for you.

The Details On A Reverse Mortgage

The reverse mortgage was created in 2009 as the Home Equity Conversion Mortgage for Purchase (HECM) following the 2008 recession. While this type of mortgage is only available to homeowners who are 62 or older, it offers a way for people to tap into the equity of their home so that they are not required to pay monthly mortgage payments. There are limitations imposed on this product, but this can be useful, as long as all risks and terms of the mortgage are understood.

What’s Required To Apply?

In order to utilize this mortgage product, the homeowner must have paid off their property entirely or have a significant amount of equity in their current home. As people who want to use a reverse mortgage will have to go through a credit check, they will have to be able to prove that they have the ability to pay for all the fees associated with home ownership. This can include common expenses like insurance, property tax and any other applicable charges that come with a monthly mortgage payment.

How You Can Use It

A reverse mortgage can be confusing to understand.  It is intended for those who want to receive monthly payments, get a lump sum payment from their equity or even access a line of credit, or just as a means of tapping into additional funds.  This means that the overall loan balance of the mortgage will increase over time due to interest.  Also, insurance may not be paid consistently.  The reverse mortgage assumes that these expenses will be taken care of once the owner has passed away and the property can be sold or the loan balance is paid by heirs.

A reverse mortgage can be a beneficial product for homeowners nearing retirement, but it’s important to be aware of the associated costs and risks involved to determine if this product is beneficial for you.  For more information, give me a call – J.P. Cook – 602-320-4253.

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17552 W Running Deer Trail Surprise, AZ 85387

$514,995

3 Beds

2 Baths

1,690 SqFt

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MLS # 6700534

Property Type Single Family Residence

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Explore this dynamic Bronze home, ready for August move-in on a homesite boasting driveway pavers and front yard landscaping. Included features: an inviting covered entry; an open dining area; a well-appointed kitchen offering quartz countertops, stainless-steel appliances, 42'' cabinets, a walk-in pantry and a center island; a spacious great room; a lavish primary suite showcasing a generous walk-in closet and a private bath with cultured marble countertops; a convenient laundry; a relaxing covered patio; an RV garage and a 2-car garage. This home also offers additional windows, ceiling fan prewiring and stone tile flooring in select rooms.

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10 W Del Rio Drive Tempe, AZ 85282

$514,995

3 Beds

2 Baths

1,674 SqFt

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MLS # 6726410

Property Type Single Family Residence

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Adorable 3 bedroom, 2 bath home located near ASU, the 60 freeway. This meticulously maintained property has had the same owner since 1990. New roof was installed this year in April 2024. A spacious living room welcomes guests upon entry. The large great room with cozy fireplace is a perfect space for relaxing or entertaining. The upgraded kitchen has a built in oven and stovetop . You will enjoy mature desert landscaping in front and the back with a cozy north facing patio or covered gazebo to enjoy the Arizona sunsets.

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4811 W Karl Street San Tan Valley, AZ 85144

$514,990

4 Beds

2.5 Baths

2,343 SqFt

Status Active

MLS # 6751689

Property Type Single Family Residence

Price Type --

INCLUDING washer/dryer, refrigerator and blinds! This plan is a knockout featuring a 2 1/2 tandem garage for extra storage or workshop. This thoughtfully designed home features 4 bedrooms and 2.5 bathrooms, offering a welcoming haven for both residents and guests alike. The sprawling island takes center stage surrounded by white cabinets, quartz counter tops and generous amount of tile throughout, not only serving as a practical workspace but also as a social hub where family and friends can gather in this great room setup. Enjoy the San Tan Mountain views while entertaining in your backyard. Each of our homes is built with innovative, energy-efficient features designed to help you enjoy more savings, better health, real comfort and peace of mind.

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5537 W Paseo Way Laveen, AZ 85339

$514,990

3 Beds

2.5 Baths

2,178 SqFt

Status Active

MLS # 6748021

Property Type Single Family Residence

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''Discover the Ruby floor plan, an exquisite single-level home that perfectly combines modern design with functional elegance. Spanning 2,178 square feet, this inviting residence offers a spacious and well-thought-out layout, featuring three generously sized bedrooms and two and a half beautifully appointed bathrooms. The Ruby's design is highlighted by a stunning modern desert exterior that seamlessly integrates with its surroundings. A striking 4-panel sliding glass door in the Great Room creates a seamless transition to the outdoors, ideal for both entertaining guests and enjoying serene moments. The heart of this home is the stylish kitchen, equipped with Stone Gray cabinets and Quartz countertops, complemented by a chic 3x12 tile backsplash. The kitchen also includes a GE stainless steel side-by-side refrigerator, making meal preparation both practical and delightful. Elegant 6x24 wood-look plank ceramic tiles flow throughout the home, adding a touch of warmth and sophistication. In addition to the main living areas, the Ruby features a versatile bonus den space, perfect for an office, playroom, or additional living area. A large walk-in pantry provides ample storage, while the GE electric washer and gas dryer offer modern convenience in the dedicated laundry area. The home's thoughtful design extends to its exterior, with pavers at the driveway enhancing its curb appeal. Satin nickel cabinet hardware adds a refined touch to the home's interior details. Situated on a north/south facing homesite, the Ruby benefits from optimal natural light and energy efficiency. Experience the Ruby floor plan, where contemporary style meets practical living, creating a harmonious environment perfect for modern lifestyles.

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