Abilene Reverse Mortgages

Many Americans reach retirement age without sufficient savings to cover rising health care and living expenses. Seniors who own their homes or have paid off their mortgages may find reverse mortgages a convenient way to access the funds they need to live more comfortably during their golden years.

Getting to Know Reverse Mortgages

Abilene homeowners 62 and older who have paid off their mortgage may qualify for a reverse mortgage and use the proceeds as tax-free income. With a reverse mortgage, the lender makes payments to the homeowner, unlike the usual situation where the homeowner pays the lender.

Homeowners who choose this mortgage do not have to make monthly payments or sell their homes. However, the loan must be repaid when the borrower dies, moves out, or decides to sell the house.

One of the most popular types of reverse mortgages is the Home Equity Conversion Mortgage (HECM), which the federal government backs.

Types of Reverse Mortgages

Reverse Mortgages come in three different types. They are as follows:

• Home Equity Conversion Mortgage (HECM)

The most common type of reverse mortgage is the HECM, obtained through FHA-approved lenders. They are guaranteed by the U.S. Department of Housing and Urban Development (HUD) for up to $9,708,000 in 2022, and the funds from the loan can be utilized for virtually anything. 

If the value of your home exceeds $970800, however, you may want to consider a proprietary loan, also known as a jumbo reverse mortgage.

• Single-Purpose Reverse Mortgage

A single-purpose reverse mortgage is the least expensive option, but they differ from standard HECM loans because they can only be used for a single, lender-approved purpose. For instance, the lender may stipulate that the loan can only be used for home improvements, property taxes, or insurance premiums. 

The government and non-profit organizations offer these loans to low-and-moderate-income homeowners, but they aren’t always readily available.

• Proprietary Reverse Mortgage

Private lenders issue proprietary reverse mortgages. You may need this type of loan if the value of your home exceeds a certain threshold. Remember that borrowers are not afforded the same protections with a proprietary reverse mortgage because the federal government does not guarantee it.

The Pros And Cons of Getting a Reverse Mortgage

Like any major financial decision, weighing the benefits and drawbacks of a reverse mortgage is crucial to determine whether it is the best one for you. Here are some examples to help you get started.

Pros:

• You get to keep your home, and your name stays on the title.

• You can tap into your home’s equity without selling it or making mortgage payments.

• Because reverse mortgages are non-recourse loans, they are protected from falling home values.

• After your passing, your spouse may be able to stay in the house even if they are not the borrower.

Cons:

• A reverse mortgage will eat away at your home’s equity.

• Your loan balance will grow if you do not pay the interest over time.

• If you don’t opt to receive the proceeds in monthly payments for the duration of the loan, you may end up outliving the benefits of your mortgage.

• If you have a reverse mortgage, your heirs may have more difficulty accessing your home’s equity after you pass away.

Keep in mind that, just like with any other type of loan, reverse mortgages are rife with fraud. Avoid mortgage scams by working with an established company like Capital Home Mortgage. 

Are You Considering a Reverse Mortgage?

A reverse mortgage can significantly help Abilene homeowners looking for additional income during their retirement years. Still, it can dramatically impact your finances, so weigh the pros and cons properly. Depending on the equity you have in your home, you may also want to consider a HELOC or a mortgage refinance as possible alternatives to a reverse mortgage.

Whether you choose a reverse mortgage or the alternative loan options, Capital Home Mortgage can help you get the funds you need to supplement your retirement income. We are a direct Texas mortgage lender, giving you access to the best interest rates and lowest fees in the state.

Please call us at (325) 387-8387 if you need more information or have questions about any mortgage products we offer. Our home loan specialists are just a call away!