Reverse Mortgage In El Paso

Homeowners 62 and older can use reverse mortgage loans to turn the value of their property into cash or monthly payments without selling or moving. The Department of Housing and Urban Development (HUD) permits these homeowners with mortgages insured by the FHA Mortgage Insurance program to either borrow against the equity in their homes or buy a new home depending on their worth or the new purchase price property.

What is a Reverse Mortgage?

A reverse mortgage is a financial transaction in which a homeowner exchanges home equity for regular payments to supplement retirement income. Unlike conventional mortgages, which decrease when the debt is repaid, reverse mortgages increase over time as interest accrues on the loan.

How does a Reverse Mortgage work?

A reverse mortgage loan enables seniors to convert home equity into cash without selling the home or making a monthly loan payment. The funds might augment income, cover anticipated expenses, or make a purchase.

Typically, the borrower has three payment options:

1. a single sum of cash, 
2. equal monthly payments for as long as both borrowers reside in the property, or 
3. equal monthly payments over time. 

Repayment is not due until both borrowers relocate, sell their home, or pass away. The lender may then exercise its security interest and foreclose on the property, or the owner or the owner’s heirs may pay off the lien. Consequently, inheritors may object to a reverse mortgage.

As with any other loan, interest accrues on a reverse mortgage beginning with the first payment to the borrower. A reverse mortgage is often an adjustable-rate mortgage (ARM) with monthly interest compounding.

Qualification Requirements of Reverse Mortgage

There are three primary qualifications for reverse mortgages:

• Age – Each borrower must be at least 62 years old.
• Occupancy – The subject home or property must be occupied as the principal residence.
• Type of Property – The property must be a single-family home, 1-4 unit multifamily property, approved planned unit development, or condominium.

A borrower must be 62 or older, own the property outright (or have a small loan balance), and have no other liens to qualify for a reverse mortgage. Property taxes, homeowners insurance, and home maintenance remain the borrower’s obligations; failure to do so may lead to foreclosure.

Borrowers must also undergo financial counseling, a critical step that helps borrowers avoid paperwork pitfalls and gain a better understanding of the loan. Using a homeowner’s accumulated equity can assist a borrower in avoiding public assistance programs. Seniors relying on government assistance should investigate how reverse mortgage payouts affect their benefits.

Types of Reverse Mortgage

• Single-Purpose Reverse Mortgage

Single-purpose reverse mortgages permit homeowners 62 and older to borrow against their home equity for a single, lender-approved purpose, such as paying property taxes or conducting house repairs. This type of reverse mortgage restricts how borrowers can use their funds.

• Home Equity Conversion Mortgage

A Home Equity Conversion Mortgage (HECM), which is only accessible through an FHA-approved lender, is the only reverse mortgage insured by the United States federal government. The HECM reverse mortgage program from the FHA permits you to take out a portion of the equity in your house.

Borrowers can use a HECM to purchase a primary residence if they have sufficient cash to cover the difference between the HECM proceeds and the sales price plus the closing fees of the property they are purchasing.

• Proprietary Reverse Mortgage

A proprietary reverse mortgage is a private loan that allows you to convert a portion of the equity in your house into cash. As a private loan, private lenders issue and insure proprietary reverse mortgages, which the government does not back.

Proprietary reverse mortgages are frequently referred to as jumbo reverse mortgages. They are sought primarily by individuals who want access to more funds than the federally insured reverse mortgage can provide and whose properties have a valuation that exceeds the government-set limit.

Apply for a Reverse Mortgage in El Paso

Which type of reverse mortgage is best for you? Call us at (915) 283- 3949 and speak with our Mortgage Specialists. We can help answer your questions and concerns about reverse mortgages in El Paso.