what is a reverse mortgage?

This useful loan option is designed to help homeowners and homebuyers aged 62 and older convert some of their home equity into cash—so they can live more comfortably, with greater financial independence. Unlike a traditional mortgage, the borrower does not make monthly payments; instead, the loan is repaid, along with accrued interest, when the borrower moves out, sells the home, or dies.*

*The borrower must meet all loan obligations, including living in the property as a principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

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What is a Reverse Mortgage?

A reverse mortgage* is a way for seniors to turn their home’s equity into cash to meet any financial need. Unlike traditional home equity loans, a reverse mortgage does not require repayment until the home is sold, or the last borrower permanently leaves the home. Borrowers are responsible to cover taxes, insurance, HOA fees, and property maintenance, just like any other mortgage.

  • The borrower(s) continue to own the home (the bank does not own it!)
  • The borrower(s) can never owe more than the home is worth.
  • There is no prepayment penalty.
  • The reverse mortgage must be paid back when the home is no longer the borrower(s) primary residence.

*The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.

*A reverse mortgage increases the principal mortgage loan amount and decreases home equity (it is a negative amortization loan). When the loan is due and payable, some or all of the equity in the property no longer belongs to borrowers, who may need to sell the home or otherwise repay the loan with interest from other proceeds. Lender charges an origination fee, closing costs and servicing fees (added to the balance of the loan). Monthly service fees are not assessed in Texas. The balance of the loan grows over time and Lender charges interest on the balance.

This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.

What can a Reverse Mortgage be used for?

Reverse mortgage borrowers may use the proceeds however they wish. Some examples include: pay off a mortgage, pay off credit cards, pay off home equity loans, make home repairs, pay property taxes, stop foreclosure, travel, or purchase a home.

How Much Money can I take out of My Home?

That will depend on your age, the interest rates, and your home’s value. Older borrowers generally qualify for more funds.

How do I receive the Proceeds?

You can take your funds as a lump sum, a line of credit, or as monthly payments. You can also use a combination of these options.

Will I have to repay the loan?

The loan becomes due when the home is no longer the borrowers principal residence. This happens when the borrowers die, the home is sold, or the borrowers live in a nursing home for 12 months or more.

What happens if I pass away? Can I leave the home to my heirs?

After the borrowers have passed, the heirs have multiple options. They may choose to sell the home, refinance the home, pay off the home, or walk away through the use of a deed-in-lieu of foreclosure. If the heirs decide to sell or refinance, the reverse mortgage is paid off at closing and any remaining equity becomes their inheritance. If you owe more than your home is worth but sell your home for the appraised fair market value, the remaining balance will be paid by mortgage insurance.

Does the bank own my home?

No. A reverse mortgage allows homeowners to retain the title and ownership of their home for as long as they live in the home and the loan remains in good standing. Like other loans, this requires the borrower to keep up with property taxes, insurance and maintenance.

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Disan Loera | Branch Manager NMLS: #274792 | 200 N Interstate 35 E Rd Red Oak, TX 75154 | Branch NMLS #1839606

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