The HECM Reverse Mortgage Loan May Be Your Key To A Happier Life.
The Reverse Mortgage Loan
Home equity and reverse mortgages were added to the Texas constitution in 1997. The lists of consumer safeguards were extensive. The Texas version conflicted with the rest of the United States. The Federal Housing Administration took issue with the changes and refused to insure these loans. With that, Fannie Mae would not make a market for these Texas home loans. As a result, very few reverse mortgages were originated in Texas until 1999.
On November 2, 1999 Texas voters approved the constitutional amendments that allowed Texas seniors (over the age of 62) to obtain a reverse mortgage. Reverse mortgages allow senior citizens to take out a loan secured by the equity in their home without having to repay the loan until they move or die, so long as they comply with the loan terms.
Seniors are now able to afford the high cost of private medical care and unsubsidized portions of needed medicines. They are able to make repairs and renovations to their homes therein improving living conditions and real estate values. They can set up trusts and lump sum investments for themselves or future generations. The myriad of options seems endless. Though they must continue to pay for property taxes, insurance, and associated maintenance costs, senior homeowners can now rest assured knowing that they cannot lose their home for failing to make a monthly mortgage payment,
With all this, why hasn’t every eligible borrower candidate chosen to take advantage of this incredible financing medium? The answer lies in the fact that the reverse mortgage concept is not only foreign to many, but is opposite of traditional financing modes.
In a traditional home equity refinance mortgage set up, a borrower would either refinance the balance that is owed or create a second mortgage and would elect to draw up to 80% of the value under Texas law. The loan would require regularly amortizing monthly mortgage payments which decreases the accrued interest over time. As such, the borrower would be required to qualify for the new loan, showing stability of income, good credit history, and a host of other loan requirements.
The reverse mortgage is different in that seniors can access between 20% – 35% of their equity (based on the appraised value) depending on their age. The proceeds can be received as lump sum, monthly payment, a line of credit, or some combination thereof. The big news is that there are minimal income and credit requirements. The loan is essentially collateral (property) based.
So when is the loan repaid? The loan must only be repaid once the last remaining borrower, eligible non-borrowing spouse, or co-borrower dies or chooses to move out of the home for over 12 months, or fails to comply with the loan terms. At that point the estate or guardian has the task of selling the real estate in order to repay the debt. The non-recourse nature of this mortgage provides the basis that the Lender can only satisfy their debt with the home and not other assets, regardless of the balance on the loan.
These features make the reverse mortgage the right choice for many seniors. Contact Armando Barbosa at 348-0077.
Move Forward With the REVERSE Mortgage Loan!
The connotation of doing anything in REVERSES turns off a lot of folks. The reverse mortgage loan allows for no monthly mortgage payments. The borrower must make property tax and insurance payments and pay for the cost maintaining the property. Please note, failure to comply with the loan terms may result in the loan becoming due and payable.
The concept is simple. The mortgage company making the loan waits to collect their interest after the borrower(s) passes or moves out of the home for longer than 12 months (as in the case of a nursing home). The deed and/or ownership of the home remains in the borrower(s) name until the home is sold, transferred or otherwise is paid off.
One important consideration to remember is that Texas Legislature introduced the Reverse Mortgage Loan as part of the Texas Home Equity Loans. This means that this type of loan is a “non-recourse loan”. The loan is designed to always maintain enough equity to pay itself off in the event of sale. If, for some unforeseen reason, the real estate market tanks and the house is worth less than what is owed, the estate would only be liable to pay off the appraised value.
The Reverse Mortgage Loan can be a win-win scenario for the borrower(s). Be sure to ask Armando to fully explain this mortgage loan product and answer any questions you may have.
O. M. was juggling her retirement income monthly--the house payment, the car payment, medications-- were all mounting. The Reverse Mortgage Loan allowed her to focus on her normal life expenses. Finally some financial relief!
R .B.'s military retirement was not stretching like it use to. Their Reverse Mortgage Loan allowed him to breath a little easier, letting him better budget for needed medications and doctor visits.
P.S. always wanted to travel more. HIs Reverse Mortgage Loan allowed him the financial freedom to do just that; as well as allow for an early inheritance distribution to his children.\
Due to unforeseen circumstances S.M family was losing their home. Their Reverse Mortgage Loan proceeds stopped the foreclosure saving their equity and allowing them to live in their home for the rest of their lives.