Waco Reverse Mortgages

It’s no surprise that many retirees are struggling to make ends meet in the face of rising inflation, given the small amount of money they receive each month from Social Security. With a reverse mortgage, senior homeowners can get access to much-needed cash while still being able to live in their homes.

Understanding Reverse Mortgages

Homeowners aged 62 and up who have paid off their mortgage may supplement their retirement income with a reverse mortgage, a type of loan that provides seniors tax-free access to a portion of their home’s equity.

In a traditional mortgage, the homeowner makes payments to the lender. Reverse mortgages are the opposite. Homeowners receive payments from the lender without being required to sell their homes. However, the loan must be repaid when the borrower dies. 

Reverse mortgages are frequently used to supplement retirement income, make necessary home repairs, and pay for out-of-pocket medical expenses.

Types of Reverse Mortgages

Reverse mortgages come in a variety of forms, each one created to satisfy a different financial need.

     1. Home Equity Conversion Mortgage (HECM) 

Home equity conversion mortgages (HECMs) are among the most prevalent types of reverse mortgages. The upfront costs for these government-backed mortgages are higher, but the money can be used for anything. You can choose how the funds are withdrawn, such as fixed monthly payments or a line of credit. HECMs are widely available through FHA-approved lenders, and borrowers must receive HUD-approved counseling before closing.

     2. Proprietary Reverse Mortgage

Proprietary Reverse Mortgages are private loans, which means the government does not guarantee them. This type of reverse mortgage typically offers a more significant loan advance, particularly if you own a home with a higher value.

     3. Single-Purpose Reverse Mortgage

The single-purpose reverse mortgage is less common than the other two and is typically offered by nonprofits and state and local government agencies. While it is the least expensive of the three options, the loan amount is usually much smaller, and borrowers can only use the money to cover one specific purpose.

Waco Reverse Mortgage Requirements

To qualify for a reverse mortgage, the primary homeowner must be at least 62 years of age. The additional eligibility requirements of a reverse mortgage include the following:

• The property serves as the borrower’s primary residence.
• The borrower must either be the sole owner of the property or have paid off a sizable portion of the mortgage.
• The borrower must have no federal debt delinquencies.

The borrower must have the financial means to continue paying property taxes, homeowners insurance, and homeowners association dues.

• The borrower must attend an information session given by a HUD-approved counselor.

Is Reverse Mortgage The Best Option?

A reverse mortgage can significantly help people needing additional income during retirement. Many people use the money to bridge the gap between their fixed incomes (such as Social Security) and their living costs (such as medical bills, in-home care, and property improvements). Also, if the home’s value increases and becomes worth more than the amount owed on the reverse mortgage, you or your heirs may get the difference.

However, if the reverse is accurate, and the mortgage balance is greater than the current market value of the property, your heirs may have to relinquish ownership of the home to the lender. That said, seniors taking out a reverse mortgage should manage the loan’s proceeds carefully to avoid running out of funds too soon.

Capital Home Mortgage has affordable interest rates for those looking for a reverse mortgage. If you’re still on the fence about getting a reverse mortgage, our Waco home loan specialists can help you explore other options, such as a Home Equity Line Of Credit (HELOC) or a refinance. 

You can count on us to provide you with all the resources and knowledge you need to make the right choice so you can enjoy your golden years to the fullest.

Get in touch with one of our loan experts at (254) 213-7343.