Answers to Your Reverse Mortgage FAQs
What is a reverse mortgage?
A reverse mortgage is a program created by the Federal Housing Administration (FHA) to help people ages 62 and older obtain a home loan without monthly mortgage payments. Also known as a home equity conversation mortgage (HECM), this type of loan is used by many as supplemental income or to purchase a new home.
At Texas Reverse Mortgage, Inc., our loan officers are specialists in reverse mortgages. We serve clients in Austin, Dallas, Fort Worth, San Antonio, Houston and everywhere in Texas. We are passionate about helping clients use this unique, low-risk loan option for income supplement or home purchase. Contact us today with any questions or to schedule a confidential consultation.
Who is eligible for a reverse mortgage?
You may be a candidate for an HECM if you:
- Are at least 62 years old
- Are a homeowner
- Own your home outright or have a low have a low mortgage balance
- Are able to pay ongoing homeowner fees including taxes and insurance
For your home to qualify for an HECM, it must be:
- A single-family home
- A 2-4 unit property
- A manufactured home built after June 1976, or
- A condominium or townhome
You must also complete a few steps before you are approved for an HECM:
- Undergo financial assessment with an FHA approved lender
- Complete a loan application
- Determine how to receive payment
At Texas Reverse Mortgage, we are here to help you at every step in the HECM process. Whether you’re just beginning to explore HECM as an option or are ready to begin the application process, contact us.
How may a reverse mortgage be used?
You can use the funds you receive through your reverse mortgage as supplemental income, for renovations, or for virtually any expenses you have. You may choose to receive a lump sum, a monthly payment or open a line of credit with your HECM loan.
Instead of receiving funds, many clients choose to purchase a new home using their HECM loan. This is a great option for patients who would like to purchase a new home without the additional burden of a mortgage payment. This is known as reverse mortgage for purchase or HECM for purchase. In many cases, we are able to complete a client’s HECM to purchase a new home even before their old homes are sold.
How is my reverse mortgage repaid?
Reverse mortgages are only available to a certain slice of people because of their special requirements that minimize risk to lenders. When you sign up for a reverse mortgage, the equity you have already gained in your home is the trade-off for your loan. If properly managed, your loan is paid off after your passing using funds from the sale of your home. Even if your home is worth less than the value of your loan, your family and dependents will not be held liable for the difference in cost.
If you decide to sell your existing home, or have used your HECM to purchase a new home and decide to sell it, you will need to repay your reverse mortgage loan. We can help you if you do decide to move to a new home. To repay your HECM, you simply will need to pay the difference between what your home sells for and the value of your HECM loan.
What about interest?
The only interest you will pay on your reverse mortgage is interest on the proceeds that you receive. This interest is not something you will have to pay while you use your HECM loan. Rather, it will be subtracted from the value of the sale of your home after you move or die. Keep in mind that you will incur fees such as property tax.
How much will I receive from my reverse mortgage?
The amount you can receive varies dependent upon:
- The value of your home
- The amount you currently owe on your mortgage
- Your age or your spouse’s age (loan is based on the youngest partner)
- The FHA lending limit
The most anyone can receive from a reverse mortgage is $726,525. As a general rule, the older you are, the more your home is worth and the more equity you have built in it, the more you can receive for your HECM.
Contact Texas Reverse Mortgage, Inc., today to see how much you can receive from an HECM. We proudly serve clients in Austin, Dallas, Fort Worth, San Antonio, Houston and surrounding areas. We’re passionate about helping our clients and we’d be honored to speak with you!