Odessa Reverse Mortgage Loans

The stock market may have become more volatile, but the United States housing market remains hot. As a result, reverse mortgages are becoming increasingly popular as a tool for seniors who need money for retirement but want to stay in their homes.    

What Is a Reverse Mortgage?

Think of a reverse mortgage as a regular mortgage where the roles are switched. In a traditional mortgage, a person gets a loan to buy a home and then pays back the loan over time. In a reverse mortgage, the homeowner already owns the property and borrows against it, obtaining a loan from the lender that they may or may not ever pay back.

Most reverse mortgages are issued through government-insured programs with stringent lending guidelines. There are also private or proprietary reverse mortgages issued by private non-bank lenders; however, these are less regulated. 

How Does A Reverse Mortgage Work?

Reverse mortgages can be hard to understand, but the best way to think of them is as a loan against the future sale of your home. The lender gives you the money in the form of monthly payments, periodic withdrawals, or a lump sum. The loan is only repaid when you die or sell the house. You or your heirs will pay back the loan with the money from the sale. This arrangement means that your heirs may have to repay your reverse mortgage.

During your reverse mortgage, you will not be required to make payments to your lender (though you can if you choose). Still, you will be responsible for maintaining the property and paying property taxes, insurance, and homeowners association dues. If you fail to fulfill these responsibilities, your lender may declare your loan due and even foreclose on your home.

Are You Eligible for a Reverse Mortgage?

To qualify for a government-backed reverse mortgage, the youngest owner of the home must be at least 62 years old. Borrowers can only use their primary home as collateral; they must own the property outright or have at least 50% equity.

Reverse mortgages are usually only available for certain kinds of properties. Eligible properties, including:

     – Single-family homes;

     – Multi-unit properties with up to four units;

     – Manufactured homes built after June 1976;

     – Condos or townhomes.

For government-backed reverse mortgages, borrowers must sit through an information session with an approved reverse mortgage counselor. They also have to pay their property taxes and homeowner’s insurance on time and take good care of their property.

Types Of Reverse Mortgages 

Most homeowners go for one of  these three types of reverse mortgages:

– Single-Purpose Reverse Mortgage

Single-purpose reverse mortgages are the most affordable type of reverse mortgage. Nonprofits or state and local governments offer these loans. The proceeds from the loan can only be used for specific reasons set/approved by the lenders, such as home improvement, medical expenses, etc.

– Home Equity Conversion Mortgage

Home equity conversion mortgages (HECMs) are backed by the United States Department of Housing and Urban Development. The loan can be more expensive than conventional mortgages, but you can use the funds for any purpose.

– Proprietary Reverse Mortgage

Reverse mortgages not backed by a government agency are considered proprietary reverse mortgages. With this type of reverse mortgage, lenders establish their own eligibility requirements, interest rates, fees, terms, and underwriting procedures. These loans may be the simplest to obtain and the quickest to fund, but they are known to attract unscrupulous professionals. 

Reverse Mortgage Fees

Typical reverse mortgages have up-front fees and costs. These fees could add up to thousands of dollars and increase the amount you owe on your loan. To avoid surprises, ensure you know how much the loan will cost. Ask questions and demand answers.

Typical reverse mortgage fees include:

– Origination fee

– Mortgage Premium Insurance

– Closing costs

– Service fees

– Monthly mortgage fee

Are You Considering a Reverse Mortgage Loan?

A reverse mortgage can assist retirees in need of supplemental income. By taking out a loan against their equity, seniors gain access to cash and can live comfortably. However, the opposite can also happen. 

If a reverse mortgage sounds appealing, contact Capital Home Mortgage today to apply for an Odessa reverse mortgage loan! If you think a reverse mortgage is not for you, no worries! We have plenty of alternative options to offer you. 

For more information about our home loan products, contact Capital Home Mortgage and speak to one of our loan specialists at (432) 218-4828. It would be our pleasure to assist you.