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CATHERINE REAGOR REAL ESTATE
FHA AND VA LOANS
CONVENTIONAL VS. SPECIALTY LOANS
Reverse mortgages let owners tap equity
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everse mortgages can help homeowners in their 60s and older stay in their house and tap some of their equity to live on. Many potential reverse-mortgage borrowers have questions about the loans, particularly if they have seen friends or relatives run into problems. Tim Nelson of Scottsdalebased V.I.P. Mortgage is an expert on reverse mortgages and a Certified Reverse Mortgage Professional. Here are his answers to some commonly asked questions. Question: Please explain what a reverse mortgage is. Who is eligible? Answer: Reverse mortgages allow homeowners 62 or older to convert part of their equity in their home into tax-free income. Monthly payments are avoided on a reverse mortgage because the interest accrues on the loan and is added to the total amount owed, instead of making monthly payments to the mortgage company. You can take out the equity in a lump sum, monthly payments, line of credit or a combination of these three options. Q: How do reverse mortgage work? A: The borrower accesses the equity in the home, and the loan amount and interest begins accruing because the borrowers are not making payments. As long as borrowers live in the home and pay property taxes and homeowners insurance, they do not have to make any payments. When the borrowers no longer occupy the property, they are required to sell the home and pay off the amount owed. So, basically the lender collects the money at the end — the amount of money that was
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Mortgage primer
Many options available; find one that works for you Sue Doerfler The Republic
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azcentral.com
Fixed-rate loans have ruled the homemortgage market for the past few years. That’s because interest rates on these mortgages have been at historic lows, making them a logical choice for many homebuyers. But they’re not the only choice. Nor are they one size fits all. Before you buy a house, consult a mortgage professional to learn about your options, what amount of loan for which you qualify and the down payment and fees required. Here’s a look at some of the mortgage products available:
Fixed rate
These are mortgages with interest rates that are fixed over the life of the loan. The loan amount is amortized into equal monthly payments. Although 30-year fixed-rate loans are most common, 15-year fixed-rate loans
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are gaining in popularity because the home is paid off more quickly and total interest charges are less, said Gary Ogami, president and owner of Pinnacle Peak Lending in Scottsdale. Shorter-term loans also may have lower interest rates. Fixed-rate mortgages are a good choice for buyers who plan to live in their homes for a long time, said Tony Cesarano, mortgage market manager for BMO Harris’ Arizona region.
Adjustable rate
These mortgages, also called ARMs, have adjustment periods, specific intervals where the interest rates can be adjusted up or down. These typically have a lower initial interest rate than fixed-rate loans, meaning a lower initial monthly payment. There is a cap on how high the interest rate can be adjusted. Currently, hybrid ARMs are most common, said John Frazza, Arizona regional sales executive for Bank of America. These have longer initial interest-rate peSee MORTGAGES, Page R3
MORTGAGE RESOURCES » Federal Housing Administration (FHA), fha.gov. » FHA 203k program, fha.gov. » Fannie Mae Homestyle Renovation Mortgage, fanniemae.com /singlefamily /mortgageproducts. » VA loans, benefits.va.gov /homeloans. » Bank of America home loans, bank ofamerica.com. » Pinnacle Peak Lending, pinnacle peaklending.com. » BMO Harris Bank home loans, bmoharris.com.
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