Texas Reverse Mortgage Information For Senior Homeowners

According to a recent news report, approximately 100,000 people took advantage of reverse mortgages last year, and the number is expected to double in 2008.  However, before basically liquidating your main asset, you need to gather some much needed Texas reverse mortgage information and get some key questions answered. For example, exactly what is a reverse mortgage; how old do senior citizens have to be, in order to qualify; what about interests rates; how can a reverse mortgage affect my government benefits; and how does the money get paid back to the lender?

If you have a television, you have likely seen commercials, and you want to know the basics of reverse mortgage information. In a regular mortgage, you are purchasing a home with a little equity for a down payment.  The balance owned on the house is the amount you have to mortgage, plus a fixed or flexible interest rate.

As you start to make payments, the equity in your home increases and the amount of the loan decreases.  The longer you have the loan, the more equity you have in your home.  Conversely, a reverse mortgage gives the homeowner a loan against the equity of the home, also known as reverse equity.  In many cases, the home is already paid for, or has very little debt attached.

However, anyone who has no lien on their home cannot get a reverse mortgage.  Texas homeowners must be at least 62-years-old or older, the house must be his/her primary residence, and the home must be well-maintained.  A reverse mortgage is for senior citizens only, as one option for their retirement planning tools.  In fact, the older seniors have the greater potential payout of the reverse mortgage.

The interest rate on a reverse mortgage is governed by the current rates for loans. The lower the interest rates, the better the loan, because the interest will not eat up as much of the equity in the home.  However, even if the interest rates are low, and the lender offers a fantastic deal for the reversed mortgage, borrowers beware! Several details must be clarified and resolved, before deciding whether a reverse mortgage is your answer to senior living.

For example, if you are currently accepting government benefits like Medicaid or Supplemental Security Income, you could actually lose your benefits, even if the monthly payments are not considered income.  According to the rules, if seniors have more than $2,000 cash in their checking or savings account at the end of the month, ($3,000 for couples) benefits could be lost. The excess must be spent before the end of the month.  So, money cannot be set aside for a vacation or special event.

In fact, the whole process can be so daunting that counselors are required to explain all the pros and cons, before senior citizens sign on the dotted line. Unfortunately, many good people have been overcharged with excessively high interest rates and fees by unscrupulous lenders who take advantage of their naiveté.  

Plus, certain rules apply to repaying the lender.  Although your home is yours to live in until you die, if you have to move to a senior care facility or you move out for any reason, the loan is due and payable within the next 12 months.  Your heirs can choose to sell the house or repay the loan and keep the home, but it will no longer belong to the senior if they are not in residence for 12 months.

Unfortunately, this can be a real problem for people who expected to stay at home until their dying day, and end up living in a retirement home because of illness or disability. However, if a senior citizen lives to be 100, and still at home, benefits will not be penalized due to longevity.  Instead, the Federal Government subsidizes the loan and will make up the difference, if payments exceed the value of the home.

So many questions!  So many answers!  Whether a reverse mortgage is right for you, it is solely your decision.  But, please become well informed and get all the Texas reverse mortgage information available.  Know your options-both pros and cons, so your retirement can truly be your golden years.