Reverse Mortgage Pros and Cons

Weighing the Pros and Cons of Reverse Mortgage

As with most financial decisions, entering into a reverse mortgage carries with it pros and some cons. At Texas Reverse Mortgage, Inc., we focus on educating the people of Texas on the federal program for reverse mortgage, also called home equity conversion mortgage (HECM). For many of our clients, a reverse mortgage creates financial stability or opens a window to a new opportunity. We work closely with our clients to determine if an HECM is the best option toward reaching their goals, or if another opportunity is better suited. To understand more about the pros and cons of an HECM, read below and contact a loan officer at Texas Reverse Mortgage, Inc. We serve the people of Austin, Dallas, Fort Worth, San Antonio and Houston, and we have more than a century of combined experience in reverse mortgages.

Are You Eligible for a Reverse Mortgage?

A reverse mortgage is only available to a select group of people. You must be age 62 or older and own your home to be eligible for this unique type of loan. Your home should be paid off or have a significant amount of equity in order for a reverse mortgage to make sense. You must also complete counseling and an interview regarding your finances to file for your HECM. If you meet these requirements, you will need to consider a few factors.

Will the Pros of HECM Benefit You?

The pros of a reverse mortgage include:

  • The freedom to use your HECM loan on virtually anything.
  • The ability to choose your loan disbursement, in a lump sum, monthly payments or line of credit.
  • The ability to stop paying a mortgage payment.
  • Protection for your dependents from having to pay back any amount toward your HECM after your death, even if the sale of your home does not cover the remaining debt.
  • Low, fixed-rate interest rates in most cases.
  • You only pay interest only on the money you withdraw.
  • Any remaining equity in your home after paying off the reverse mortgage goes to heirs.
  • For some home owners, the chance to purchase a new home with an HECM from their old homes.
  • Any Social Security or Medicare benefits you have should not be affected.

If you could benefit from a steady income, lump sum, or financial assistance to purchase a new home, consider a reverse mortgage. The team at Texas Reverse Mortgage, Inc., is ready to answer your questions honestly.

What are the Negatives of a Reverse Mortgage?

The reverse mortgage program is a federally run program that is designed to help seniors, or those aged 62 and older, to utilize some of the equity they have invested in their homes for other purposes. To receive an HECM, people must go through an interview and counseling and work with a Federal Housing Administration-approved lender. These steps exist to help dissuade borrowers who may not be a right fit for this program.

Some cons do exist that may dissuade you from pursuing this type of loan. They include:

  • The loss of equity in your home in return for the loan money you receive. This means that after your death, the amount that remains owed on your reverse mortgage will be taken out of the sale profits of your home before any is given to your dependents.
  • You will need to maintain homeowner’s insurance payments and pay taxes on your home.
  • There is a loan origination fee you must pay in order to begin an HECM contract.
  • Your home must serve as your primary residence. If you would prefer to use the equity in your home towards the purchase of a new home, we can complete a reverse mortgage for purchase.

Inform Yourself on the HECM Full Picture Today

If you could benefit from supplemental income, are 62 years old or older and own a home, consider reverse mortgage. By carefully weighing the pros and cons of reverse mortgage with one of our licensed loan officers, you can determine if this type of loan is right for you. Contact us today for a confidential, open discussion about your unique situation. The team at Texas Reverse Mortgage, Inc., proudly serves patients in Austin, Dallas, Fort Worth, San Antonio and Houston.