Refinancing Your Home:

If you are interested in borrowing against your home’s available equity, you have choices. One option would be to refinance and get cash out. Another option would be to take out a home equity line of credit (HELOC). Here are some of the key differences between a cash-out refinance and a home equity line of credit:

Loan Terms:

• Cash-out refinance pays off your existing first mortgage. This results in a new mortgage loan which may have different terms than your original loan (meaning you may have a different type of loan and/or a different interest rate as well as a longer or shorter time period for paying off your loan). It will result in a new payment amortization schedule, which shows the monthly payments you need to make in order to pay off the mortgage principal and interest by the end of the loan term.
• Home equity line of credit (HELOC) is usually taken out in addition to your existing first mortgage. It is considered a second mortgage and will have its own term and repayment schedule separate from your first mortgage. However, if your house is completely paid for and you have no mortgage, some lenders allow you to open a home equity line of creditin the first lien position, meaning the HELOC will be your first mortgage.

How You Receive Your Funds:

• Cash-out refinance gives you a lump sum when you close your refinance loan. The loan proceeds are first used to pay off your existing mortgage(s), including closing costs and any prepaid items (for example real estate taxes or homeowner’s insurance); any remaining funds are yours to use as you wish.
• Home equity line of credit (HELOC) lets you withdraw from your available line of credit as needed during your draw period, typically 10 years. During this time, you will make monthly payments that include principal and interest. After the draw period ends, the repayment period begins: You are no longer able to withdraw your funds and you continue repayment. You have 20 years to repay the outstanding balance.

Interest rates:

• Cash-out refinance is available through either a fixed-rate mortgageor an adjustable-rate mortgage. Your lender can provide information about fixed-rate and adjustable-rate mortgage options so you can decide which one best fits your situation.
• Home equity line of credit (HELOC) has an interest rate that’s variable and changes in conjunction with an index, typically the U.S. Prime Rate as published in The Wall Street Journal.Your interest rate will increase or decrease when the index increases or decreases. Your lender may also offer you a fixed-rate loan option that would allow you to convert all or just a portion of the outstanding variable rate balance to a fixed-rate loan

Closing Costs:

• Cash-out refinance incurs closing costs similar to your original mortgage.
• Home equity line of credit (HELOC) usually has no (or relatively small) closing costs.

If you think that borrowing against your available home equity could be a good financial option for you, talk with your lender about cash-out refinancing and home equity lines of credit.¹ Based on your personal situation and financial needs, your lender can provide the information you need to help you choose the best option for your specific financial situation.

Melanie Sedam is the owner and a loan originator at The Paseo Group and she can be contacted at 520.829.5219 #1.

Tohono Chul (aka Tohono Chul Park) is a botanical garden, nature preserve and cultural museum located in Casas Adobes, a suburb of Tucson, Arizona. The words “tohono chul” translate as “desert corner” and are borrowed from the language of the Tohono O’odham, the indigenous people of southern Arizona. The mission of Tohono Chul is to connect people with the wonders of nature, art and culture in the Sonoran Desert region and inspiring wise stewardship of the natural world.^{[citation needed]}

The 49-acre (19.8 ha) site itself offers a setting for Tohono Chul’s regional focus. Views of the Santa Catalina Mountains form a backdrop for the natural desert habitat and its location within existing migratory tracks provides a temporary home for many species of wild, native fauna. Thirty-eight species of birds make their permanent home here while another 57 migrant species visit seasonally, and a variety of reptiles and mammals, from Gila monsters to bobcats, may be spotted on the grounds.

Within these surroundings, Tohono Chul has developed thematic displays using its botanical collections which consist primarily of plants native to the Sonoran or Chihuahuan Deserts. They include more than 150 species of shrubs and trees; 300 species of cacti and succulents; and 50 species of wildflowers. In addition, Tohono Chul has the largest private collection of native Night-blooming Cereus – Peniocereus greggii – and each summer hosts “Bloom Night”, the one night it is predicted the greatest number of cereus flowers will open.

Outdoor exhibits include:

• EthnobotanicalGarden — displays indigenous plants cultivated by Southwestern native peoples for food, medicine and other necessities of life, as well as those crops introduced by European settlers
• RiparianHabitat — replicates the stream-side natural vegetation of Arizona’s threatened riparian communities
• GeologyWall — this display illustrates the geologic history of the nearby Santa Catalina Mountains
• SaguaroDiscovery Trail — an exploration of the saguaro through its cultural connections to the Tohono O’odham and its botanical connections to the natural history of the Sonoran Desert
• Sin Agua Garden — a former parking lot converted into a rainwater harvestingdemonstration
• Desert Living Courtyard — another parking lot is now a series of garden vignettes in a variety of design aesthetics all promoting Xeriscapeand intended to inspire homeowners to use native and arid-adapted plants in backyard landscapes^{[citation needed]}
• Sonoran Seasons Garden — the five seasons of the Arizona Upland subdivision of the Sonoran Desert
• Desert palmOasis — native fan palms shelter in this recreation an isolated mountain canyon found along the east coast of the Gulf of California

Tohono Chul’s changing indoor arts and cultural exhibitions are community oriented, and feature community groups and artists of all ages. Three exhibit spaces allow for different types of exhibitions, from large group shows lasting several months to smaller, one-man exhibits on display for six to eight weeks. The focus may be on traditional or contemporary art, and include paintings, sculpture and folk arts, but exhibitions also address environmental concerns affecting the Sonoran Desert and the Southwest. In addition, a selection of basketry, fiber arts, sculptural works and paintings forms the core of a Permanent Collection of Native American artwork.

Tohono Chul is currently closed but word is that it will be open by June 30th.

Website:       https://tohonochul.org/

 

 

 

Tumamoc Hill, Tucson          https://youtube:lg9ya-5LRe8

Recently, the city of Tucson was recognized as one of ten cities in the United States that might actually benefit from the Caronavirus Pandemic because of its livability, open spaces, climate, and ability to handle growth.  People and companies who may move to Tucson to escape large cities will be the newest in a long line of human dwellers in the area. Tumamoc Hill is a great example of what makes Tucson so special and so inviting for people who may be looking to move to the Tucson area.

Tumamoc Hill is a living laboratory of both the desert and human history in this area on the edge of downtown and has been a place of continual research since 1903.  Tumamoc and the surrounding area along the Santa Cruz River is remarkable in that it is the longest continually inhabited site in the United States.  Radiocarbon dating shows that there was maize cultivation over 4,000 years ago.  About 2500 years ago a settlement was built on the hill and farming at the base of the hill supported Hohokam settlements.  In the 18^th century, the Spanish established Mission San Augustin del Tucson near the base of the hill.

Tumamoc Hill has reopened as of May 25^th and is open from 4 a.m. to 10 p.m. daily.

Biosphere 2 is a scientific research station owned by the University of Arizona.  It was constructed in 1987-1991 as an American Earth System Science research facility.  At one time Columbia University managed Biosphere 2 until the University of Arizona took it over in 2011.

Originally Biosphere 2 was used to demonstrate the viability of closed ecological systems to maintain human life in outer space.  Today they are conducting research on sustainability and production of food on Mars along with soil erosion and water.  The complex has seven biome areas; a rain forest, ocean and coral reef, mangrove forest, fog desert, savanna grassland, agriculture system, model city and human habitat living spaces.

The University of Arizona has has many research projects they are conducting along with providing summer camps for students, conferences, and tours for the public.  The complex is made of glass domes and makes for a fascinating and informative place to visit.  Biosphere 2 is just 20 miles north of Tucson near Oracle, Arizona.

 

 

Arizona State Parks and Trails are open for responsible outdoor recreation.

As of May 15, 2020: Arizona State Parks and Trails, Recreation Parks, and Campgrounds are open. Many historic parks are still closed. Cave tours at Kartchner Caverns are closed through June 1. All events have been postponed through June 1. Parking may be limited and there are capacity limits at each park to encourage social distancing. No same-day overnight reservations.

Arizona State Parks and Trails is monitoring the situation around COVID-19 and the impact of coronavirus for our state parks. We are taking the recommended precautions presented by the Arizona Department of Health Services and the Center for Disease Control (CDC) to provide a safe experience for our visitors as they responsibly enjoy campsites, cabins, and hiking trails throughout Arizona’s state parks. Arizona’s state parks are included in the list of essential services provided by Governor Ducey.

AZP is taking the necessary precautions for our visitors, volunteers and staff as recommended by the CDC and Arizona Department of Health Services. They are asking that visitors help follow these guidelines by not gathering in groups, maintaining social distance of six feet, using a different park or trail if it is crowded, using hand sanitizer, and packing out all trash. AZP will continue to provide open spaces, hiking trails, campgrounds, and outdoor destinations for people to enjoy as long as we are able.

Closed Facilities:

Alamo Lake State Park – camping loops D&E
Colorado River State Historic Park
Fool Hollow Lake Recreation Area – restrooms, showers and tent camping closed through May 20
Fort Verde State Historic Park
Jerome State Historic Park
Kartchner Caverns cave tours
McFarland State Historic Park
Riordan Mansion State Historic Park
Tonto Natural Bridge State Park – trails to the bridge and Goodfellow Lodge
Yuma Territorial Prison State Historic Park

Day-use Visitors:

At this time, all recreational state parks and trails are open to the public. Most historic parks are closed. Contact centers and gift shops may be open with physical distancing requirements. Spend time in the great outdoors and fresh air by exploring hiking trails, but please do so responsibly. We will be limiting the number of people entering the park to help maintain social distancing guidelines. Expect temporary closures at busy parks and reduced parking spaces.

Campgrounds and Cabins:

Campgrounds and cabins are open. Rangers will make contact outside when you arrive. We are following Arizona Department of Health and CDC guidelines for all cleaning procedures at campsites, cabins, restrooms, and public spaces. RV campers may be asked to use RV facilities.

Kartchner Caverns Cave Tours:

Kartchner Caverns State Park will begin running limited cavern tours, by reservation only, on June 1, 2020.  No same day or walk-up tickets will be available.  Masks or a face covering that covers both the mouth and nose will be required to enter the cave, for your safety as well as the safety of our staff and other visitors. If you are not comfortable with this requirement, please consider delaying your visit.  We are asking that visitors bring their own mask/face covering.  Tour capacity will be limited to six visitors per tour.  Cavern tours will be temporarily restricted to ages 8 and over.  If you are not feeling well, are showing any symptoms of COVID-19, or have been exposed to someone who has tested positive for COVID-19, please delay your visit, or call us to reschedule for a later date.  There will be no Helmet & Headlamp, Photo Tours, or ASL tours until further notice.

Park Events and Family Campout:

Park-sponsored events are cancelled or postponed until after June 1. Family Campout will resume its season in Fall 2020. If you have questions about a specific event, please contact that park directly.

 

For more information on the State Parks of Arizona:

https://azstateparks.com/

 

Advantages of Arizona

Arizona has many advantages, which is exactly why so many people have been moving there lately. If you like hot weather almost all year long, Arizona is the place to be. Arizona has over 320 sunny days yearly, which is the majority of the year. In the summertime, the temperature can come up to 120 degrees Fahrenheit. During this period, it is really important to stay hydrated and inside as much as possible because the sun can be cruel to human skin. And summertime in Arizona is the off-season if you want to move. It’s the time when moving inside the state lines of Arizona is the cheapest and fastest as not many people want to deal with packing and moving when it’s 100 degrees outside.

 

Arizona has good public transport. So, if you are someone who does not like to drive around too much, this is perfect for you. It is mostly public transportation, but Phoenix has a metro and it is expanding more and more. Because of this, there is not a lot of traffic on the highways.  Good public transport makes it easier to move inside the state of Arizona.

 

Another great thing about Arizona is that it has good jobs available throughout the state and rural options available too. Which definitely means you could live comfortably. Especially because Arizona housing is not expensive at all. Many families are moving to Arizona and renting for the first year. Expect to pay around $1,000 per month if you need a two-bedroom apartment. Even though Arizona is very hot, there are not many problems with insects or exotic animals.

 

Entertainment

Because of the weather found in the desert, several open-air festivals are available to enjoy in the state. Which is great for young people. But Arizona also has plenty of museums, operas, and theaters if you prefer that kind of fun. Cinemas are on every corner. There is also a huge variety of restaurants from Thai food to Moroccan food. Many celebrities are starting to invest in Arizona’s food scene by opening restaurants. Anything you can think of, you can find it. People in Arizona love outdoor activities. Arizonians also love going out to clubs and bars. That is exactly why you can always find a good place to have a drink and dance to some good music. And if you like to shop, big shopping malls can be found all over the state.  If you have not already, you must go to the Grand Canyon.

 

Disadvantages of Arizona 

Some are moving out of Arizona for good and it is because of the disadvantages of Arizona. Yes, Arizona has nice weather but in the late summer, it also has frequent afternoon monsoons. Monsoons are powerful thunderstorms that often induce street flooding or damage from lightning strikes. Not to mention those big dust storms you see on the Internet.

 

One of the biggest disadvantages is that gun ownership is strong within the state. Some will, of course, find this as a big advantage. But if you are someone who does not like guns, you definitely should not be moving to Arizona. You will feel unsafe walking around knowing that every third person on the street owns a gun. Arizona also tends to lean toward conservative values from a political standpoint.

 

Should you be moving to Arizona?

Considering how many advantages Arizona has, the answer is yes. You should be moving to Arizona. Arizona’s cities are among the top 100 best places to live in. But that is of course if you are someone who likes warm weather, outdoor activities, bars and clubs. But it also goes for people who prefer to be inside more. As we said, Arizona has many museums and theaters and cinemas. You should also be moving to Arizona if you do not want to have any problems with insects or pests in your home. Even though your home is inexpensive, you really should not be having to spend your money on something awful like that. But you might have to spend some extra money after the monsoons and floods come. There is also a risk of losing your whole house. We cannot forget to mention the fires because the weather is hot.

 

As you can see for yourself, there are many things to consider before deciding whether you should or should not be moving to Arizona. It is up to you to calculate the expenses and whether it is worth it or not. Our advice is to compare the advantages and disadvantages of Arizona to the advantages and disadvantages of your current state. That way you will easily see whether you want to move your whole life to Arizona or no.

 

Nestled at the base of the Catalina Mountains’ Pusch Ridge along the Northwest Oracle Road corridor is Steam Pump Ranch where the Oro Valley Farmers Market sets up every Saturday morning in the early dawn hours. Located at 10901 North Oracle Rd. in Oro Valley just north of the Home Depot Retail Center, the Market is open 52 weeks a year with winter hours going from 9 AM to 1 PM October through April and 8 AM to 12 Noon May through September.

Since 2004, the Oro Valley Farmers Market has become a meaningful community event in support of local farms, ranches and small food purveyors.  If you are looking for “fresh” look no further than the Heirloom Farmers Market.  You will even find some unusual faire that you certainly will not usually find in a supermarket. Does summer squash, lavender honey, and green chiles sound good? The Market has dozens of vendor stalls and hundreds of customers each week looking for just the right thing to complement their meals.

Friends, families and neighbors stroll the grounds where historic preservation of the buildings, farming artifacts and heritage gardens are showcased. The Oro Valley Farmers Market has a wonderful, friendly, and relaxed atmosphere while offering the seasonal bounty from the surrounding farming communities as well as supporting special events at the Ranch.  Visitors will find local fruits and vegetables as well as ranch-fed beef, pork and farm fresh eggs carrying on the ranch’s agricultural traditions.

Second Saturdays at Steam Pump Ranch has fun-filled activities for the whole family. The Steam Pump Ranch hosts cultural presentations and activities for children.  And best of All…it’s FREE!

Heirloom Farmer’s Market Website:

https://www.heirloomfm.org/markets/oro-valley/

Stump Pump Ranch’s Website:

https://www.orovalleyaz.gov/parksandrec/historic-and-cultural-resources/steam-pump-ranch

Catalina State Park – A Jewel in the Desert

So many things have shut down since the Covid-19 virus has affected our everyday schedules but those of us living in Arizona have been lucky that our Arizona State Parks have not been shut down and still offer the ability to get outdoors and enjoy nature and shake of that “cabin fever” that many of us are experiencing during our mandatory .  Catalina State Park has been a magnet for people in the Tucson area who want to get out, get some fresh air, and add some exercise to their daily routine.  Although everyone is still asked to follow recommended routines like regular hand washing, social distancing, and the use of masks and gloves to contain the spread of virus, Catalina State Park offers a safe area to enjoy the beautiful “green desert.”

Because of its’ easy access to metro areas the park fills quickly during morning hours.  The best time to visit Catalina State Park is during off-peak hours (after 2 p.m.)  Parking is only allowed in designated parking areas and main trailhead parking is limited.  When the parking lot is full, visitors will be turned away.

If you are able to spend time here enjoy the 5,500 acres of Saguaros, native vegetation, abundant wildlife, and the incredible trail systems that can take you to the top of Mount Lemon.  Upcoming events are certain to happen as everything gets back to normal so consider attending the Star Party on October 10th and enjoy the wonders of the night sky.

Catalina State Park Website:

https://azstateparks.com/catalina

Hiking Trails in Catalina State Park:

https://azstateparks.com/catalina/things-to-do/trails

 

How Does a Reverse Mortgage Work – Definition & Requirements

A reverse mortgage, also known as the home equity conversion mortgage (HECM) in the United States, is a financial product for homeowners 62 or older who have accumulated home equity and want to use it to supplement retirement income. Unlike a conventional forward mortgage, there are no monthly mortgage payments to make. Borrowers are still responsible for paying taxes and insurance on the property and must continue to use the property as a primary residence for the life of the loan.

These loan products can be a challenge to explain or understand, even for people who have plenty of financial experience. We’ve put together this introductory article in hopes of better explaining the basics in simple terms. Here’s what we’ll cover:

Reverse Mortgages for Dummies

In general, it’s easiest to explain these loans by beginning with a comparison to a better known financial product, the home equity loan. At its core, the reverse mortgage is a home equity loan that’s designed to help seniors tap into the equity in their homes. This loan is only available to homeowners who are 62 or older and have built up substantial home equity.

The other unique features of a reverse mortgage are best explained by a comparison to traditional forward mortgages. In a forward mortgage, the borrower makes monthly payments to the lender, gradually reducing the loan balance and building equity. With a reverse mortgage, the borrower receives payments from the lender and does not need to make payments back to the lender as long as he or she lives in the home and continues to fulfill basic responsibilities, such as payment of taxes and insurance. The loan balance grows over time as the borrower receives payments and interest accrues on the loan; home equity declines over time. Essentially, the mortgage works in the reverse direction of a forward mortgage, which is where the term “reverse” comes from.

All loans must eventually be repaid, and this one is no different. The loan is due once the borrower sells the home or passes away. Of course, the borrower may also choose to pay off the loan at any time. In most instances, a reverse mortgage is paid off when the mortgaged home is sold. It is important to note that reverse mortgages are designed so that the amount owed cannot exceed the value of the home. If, for example, a reverse mortgage balance is $150,000, and the house is sold for $125,000, the borrower does not owe the difference. If the house can be sold for more than the value of the reverse mortgage, that equity belongs to the borrower or the borrower’s estate.

Today, almost all reverse mortgages that are originated are Home Equity Conversion Mortgages (HECM). The HECM is a program of the Federal Housing Administration (FHA), and these loans are guaranteed by the federal government. This means that you do not need to worry about your reverse mortgage lender failing to make payments to you. We’ll cover what this really means later, but it’s important to note that the rest of the information here applies to HECM reverse mortgages unless explicitly noted.

Who is Eligible for a Reverse Mortgage?

One of the strengths of the HECM loan program is that there are not overly restrictive requirements, making these loans easier to qualify for than other financial products such as a mortgage refinance, home equity loan, or home equity line of credit (HELOC).

You are eligible for a reverse mortgage if:

• You are 62 or older.
• You own your home and use it as your primary residence.
• The house is single family, multi-family (up to 4), or an approved condominium or manufactured home.
• You own your own home free and clear or only have a small amount left to pay on the existing mortgage.
• Your home is in good condition prior to taking out the loan.

You must meet with a HUD approved counselor before obtaining a reverse mortgage to determine if the product is suitable for your needs. The counseling sessions will help you understand how the loan works and different alternatives that are available to you.

All prospective borrowers must also undergo a financial assessment to qualify. This assessment makes sure that the borrower can pay for:

• Property taxes
• Homeowner’s insurance
• Basic home maintenance
• Home Owner’s Association (HOA) fees if applicable

How It Works

When you own a home with a traditional mortgage, you gain equity over time as you pay down the loan. Home equity is the difference between what your home is worth, its appraised value, and any debt that you have from mortgages against the home. Let’s say, for example, that you own a home worth $300,000 in today’s real estate market, and you only owe $50,000 on the mortgage balance, having paid down the rest. You have valuable home equity worth $250,000, which is calculated by taking the $300,000 value and subtracting the $50,000 still owed. If you are like most Americans, the chances are high that this $250,000 worth of equity represents a substantial portion of your net worth, and as you reach retirement age you may want or need to tap into this wealth to supplement your fixed income.

There are a few options for tapping into your home equity that you may be familiar with – selling the home, taking out a home equity loan, or obtaining a home equity line of credit. However, these options may not be suitable for you – selling your home doesn’t make sense if you do not wish to move, and home equity loan and HELOC options may be difficult to obtain.

There is an alternative solution, however, and that is the reverse mortgage. If you are eligible and the product is suitable for your needs, a lender can offer you fixed monthly payments or a line of credit based on the value of your equity. Though there are other factors involved, you can think of the lender giving you a loan to you based upon how much equity you have in the property.

How Much Can I Borrow?

The amount of your reverse mortgage is based on how old you are, how much your home is worth, and the interest rate that you are offered on the loan.

Generally speaking, your borrowing power increases:

• When you are older. An 80-year-old will be able to borrow more than a 62-year-old if all other factors are equal.
• If your home is more valuable and/or you have a higher amount of home equity.
• As interest rates fall. You will be able to borrow more at a 4% rate than a 6% rate.

 

Options for Withdrawing Your Money

One of the best features of the HECM program is that borrowers are given a great deal of flexibility in how they receive the proceeds of the reverse mortgage.

There are four basic options:

• Withdraw a lump sum of cash when the loan closes.
• Receive a monthly annuity for as long as the borrower lives in the house. This is called a “tenure” annuity.
• Receive a monthly annuity for a set period of time chosen by the borrower. This is a “term” annuity.
• Take out a line of credit that can be used at the borrower’s discretion. This credit line actually grows with the passage of time.

Of course, a senior obtaining a reverse mortgage can also choose to combine multiple options into a plan that best suits his or her needs. For example, a senior could choose to take out a certain amount of cash at closing while also receiving an annuity.

There is also significant flexibility with changing from one option to another over time. For example, if a borrower receiving an annuity wished to switch to a line of credit instead, he or she could do so by paying a small fee.

 

How is the Government Involved?

This is a big point of confusion, especially since advertisements have sometimes promoted the reverse mortgage as a “government benefit” of some kind. First, it’s important to note that the FHA, a government agency, is not loaning you any money. You are working with a private company, and the FHA is providing a guarantee on your loan. This guarantee protects you in two significant ways.

First, the FHA guarantees that the senior will receive all the payments that he or she is entitled to as a result of the reverse mortgage. This removes the risk of the lender going bankrupt or simply refusing to make good on its obligations. Second, the FHA protects the borrower and his/her estate from ever owing more on the loan than the home is worth. In circumstances where the debt outstanding on the reverse mortgage exceeds the value of the home, the FHA covers the difference.

Key Benefits

The amount of your reverse mortgage is based on how old you are, how much your home is worth, and what interest rate the lenders offers to you. Generally speaking, the older you are and the more your home is worth the more you’ll receive.

With a reverse mortgage there is no loan to repay as long as you are alive, living in the home, and keeping the terms of your loan. You can have the money disbursed to you in the form of a check or a line of credit. Lump sum payments are also popular; in 2011, 73% of borrowers chose a lump sum payment.

The loan generally does not have to be paid back until either the last surviving homeowner dies or moves out of the home. After that happens, the estate typically sells that home and uses the proceeds to repay the reverse mortgage loan. If there is extra money left over the heirs get to keep it. If the house is sold and there is not enough money to repay the payments that the lender has made, then it’s tough luck for the lender. They have to accept the financial loss and cannot go after the heirs for the balance.

Reverse Mortgage Fees?

There are three major fees that borrowers must pay. Most are similar to those paid on a forward mortgage.

These are the upfront fees that you will need to pay:

• Origination fee paid to the lender. This is government regulated and ranges from a minimum of $2,500 to a maximum of $6,000, depending on how much your property is worth. The exact formula is 2% of the first $200,000 in property value and 1% of the amount above $200,000.
• Third party fee. This is multiple smaller fees paid to individual third parties, but we’ve lumped them together for simplicity. Appraisal, title, inspection and so on.
• Upfront mortgage insurance premium (MIP). This fee is paid to the FHA, and in all cases it is 2% of the property value. This premium pays for the protections that the FHA gives to borrowers.

Over the life of the reverse mortgage, borrowers must also continue to pay a 0.5% annual MIP on the loan balance. Interest will also accrue on the balance. Generally, the costs of a reverse mortgage are financed into the loan so that the borrower does not have to pay out of pocket. Instead, the money is being taken from the home’s equity.

Let’s return to our example from before, where we owned a $300,000 home and add up the fees.

• First is the origination fee, calculated as $200,000 * 2% + $100,000 * 1% = $5,000.
• Second are third party closing costs, which we’ll estimate at $1,500.
• Third is the upfront MIP, calculated as $200,000 * 2.0% = $4,000

This gives an upfront cost of $10,500, which is generally financed, meaning it is added to the loan balance. This means that before you borrow any money, you have spent $10,500 of your home equity to obtain the loan.

Of course, not all lenders charge the maximum origination fee possible. It’s possible to find one who will charge you a reduced amount, and in some cases it’s possible to get a rebate, which is essentially a negative origination fee.

Does a Reverse Mortgage Borrower Have Any Obligations

The home must continue to be used as the primary residence. Seniors must also maintain the home, do needed repairs, and stay current on property taxes and homeowner’s insurance premiums. Otherwise they risk default. Bankruptcy can also be a violation of the reserve mortgage agreement. Once the homeowner is in default they are subject to foreclosure – and the unexpected loss of one’s home can be especially tragic for an elderly person. Thankfully the financial assessment added in 2014 makes this far less likely.

Is a Reverse Mortgage Right for You?

In 2012, the Consumer Finance Protection Bureau put together a report to examine the reverse mortgage industry. This report concluded that the following groups of seniors were most likely to benefit from obtaining a reverse mortgage:

• Those looking to supplement a fixed income in retirement.
• Those who need a home equity line of credit (HELOC) but cannot qualify.
• Seniors who will remain in the home for a long time horizon.
• Those who are looking to use a reverse mortgage as a financial tool as part of a retirement planning strategy.

This list is a good start, and we have a few additional uses for reverse mortgages that consumers may find useful. Here are additional ways that a senior could use the proceeds of a reverse mortgage:

• Pay off a forward mortgage and eliminate the monthly payment that goes with it.
• Use a credit line as a means of paying unexpected expenses, protect against loss of income from the death of a spouse, and/or to make sure that retirement income remains stable even if your other sources of funds fluctuate.
• Purchase a home using the HECM for Purchase

A Few Questions to Ask Yourself

1. Is there anyone who lives in the home that will be mortgaged besides the borrower or borrowers?

YES: When the borrower dies or moves out of the home, the reverse mortgage becomes due. This could affect those living with you, such as a younger spouse, children, or other family members. Discuss the situation with them beforehand and then proceed if it makes sense for you.

NO: There is no need to worry about your family or loved ones needing to move out when the reverse mortgage becomes due.

2. Do you plan to keep living in your home for an extended period of time?

YES: Reverse mortgages are expensive over a short time horizon and get progressively less expensive as more time passes. Thus, a reverse mortgage is more likely to be right for you if you will remain in your home for a long time.

NO: If you’re not planning to stay in your home, there are other short term options that are likely cheaper. A reverse mortgage is less likely to be right for you, especially after the FHA discontinued the HECM Saver program.

3. Is it important for you to leave your home to your family without debt attached to it?

YES: A reverse mortgage is probably not right for you. If you are comfortable leaving some debt on your home, there are reverse mortgage options that will limit the amount of equity that you withdraw, leaving your heirs with a more valuable inheritance.

NO: A reverse mortgage is more likely to be right for you.

Additionally, the senior must continue to use the home as his or her primary residence. Once the home is not used as a primary residence for 12 months, the reverse mortgage becomes due.

Arizona gained 107,628 residents in 2017, one of largest population gains among the nation, according to Census Bureau estimates. The rapid growth should contribute to a promising job market and a strong recovery in housing

In 2017, California was one of the top five leading states in the U.S. for people moving out of the state. Arizona is the top state for inbound moves, with 60 percent of people moving to Arizona last year. Following Arizona is Idaho, North and South Carolina, and Tennessee among the top inbound states for 2017. More than 30,000 people have left California for Arizona in each of the past three years. The big concern causing this move

California residents pay nearly twice as much state income taxes. The individual income tax rate is 4.54 percent in Arizona. It’s 9.3 percent in California.

Equity refugees have more money to buy and invest in less-expensive housing in states like Arizona. Oscar Wei, senior economist at the California Association of Realtors, said the cost of living and doing business in California clearly are main factors in California-Arizona migration patterns.  When you compare home prices of California to Arizona, Wei said, “California is about 60 percent higher than Arizona in general in terms of the state median price.”

 

Arizona’s total population growth rate of 3.15 percent between 2015 and 2017 was second only to Florida’s 3.53 percent among states with a population greater than 5 million people, according to raw census data.

While this has led to a slowdown in California’s population growth, other problems are pushing people to actively leave the state. Kotkin identifies two key groups quitting California: baby boomers approaching retirement and middle-income families aged 35-44. Aging boomers can sell their one asset — their house — and either afford a larger, nicer home in Arizona or a modest one and pocket the difference.

A company that manufactures workbenches and lab furniture in Orange County recently relocated to Goodyear to save money, while creating 30 new jobs in Arizona with the savings incurred by move. The director of sales for this company stated the move will increase most assuredly increase the stability and longevity of his business and increase the living standard of his employees. According to NerdWallet, a cost-of-living-calculator application, the cost of living in Orange County is 56 percent higher than living in Phoenix.