Reverse Mortgage Options In Austin

What is a Reverse Mortgage?

A reverse mortgage is a loan used by homeowners over the age of 62 who have significant equity in their homes. Seniors may borrow against their equity to pay for cost-of-living costs late in life, frequently after they have exhausted all other resources or sources of income.

Like a standard mortgage, a reverse mortgage enables homeowners to borrow money while using their home as collateral. When you take out a reverse mortgage loan, the title to your property remains in your name, just like with a regular mortgage. However, unlike a typical mortgage, borrowers do not make monthly mortgage payments with a reverse mortgage loan. The loan is repaid when the borrower no longer resides in the home. Each month, interest and fees are added to the loan total, which causes it to rise. Homeowners who take out a reverse mortgage must pay property taxes and homeowners insurance, utilize the property as their primary residence, and keep it in excellent shape.

Types of Reverse Mortgage

There are three types of Reverse Mortgages:

• Single-Purpose Reverse Mortgage

State, local, and charitable organizations all provide single-purpose reverse mortgages. Because it is guaranteed by the government and other Non – governmental organizations, it is the least expensive alternative for a reverse mortgage loan. As a result, homeowners should expect to pay less interest and fees with a single-purpose reverse mortgage than with a HECM or a proprietary reverse mortgage.

The name is the most crucial thing to understand about a single-purpose reverse mortgage. You can only utilize your proceeds for one purpose, which your lender must permit.

• Home Equity Conversion Mortgage

The Home Equity Conversion Mortgage (HECM) is a reverse mortgage program offered by the Federal Housing Administration (FHA) that allows you to withdraw some of the equity in your home. You can withdraw your savings in various ways, including a predetermined monthly amount, a line of credit, or a combination of the two. You can also use a HECM to buy a primary house if you have enough cash to cover the difference between the HECM proceeds and the purchase price plus closing charges.

To be eligible for a HECM, you must meet the following requirements:

• You must be 62 or older.
• Own the property outright or with a low mortgage balance
• Use the property as your primary residence.
• You must not be in arrears on any government debt.
• Attend a consumer information workshop led by a certified HECM counselor.

The following eligible property types must meet all FHA property standards and flood requirements:

• Single-family home or 1-4 unit house with the borrower occupying one unit
• The United States Department has approved condominiums of Housing and Urban Development (HUD).
• Manufactured home that fulfills FHA standards

• Proprietary Reverse Mortgage

A proprietary reverse mortgage is a private loan that lets you convert a portion of the equity in your property into cash.

Private lenders finance proprietary reverse mortgages, which the federal government does not back. They help homeowners seeking more money and homes with greater appraised worth. If your property is valued more than the federally backed HECM financing maximum of $970,800 in 2022, you may be eligible for a proprietary reverse mortgage.

Apply for a Reverse Mortgage in Austin

If you are a senior wondering if a reverse mortgage is a suitable option for you, give us a call to discuss. Speak with one of our Reverse Mortgage Specialists at (512) 237-7400.