Texas Reverse Mortgage Rates And Information

Reverse Mortgages are actually nothing new.  The concept was originally signed into law by President Ronald Regan in 1988.  However, it has definitely grown in popularity in the last few years.  In 2006, approximately 77,000 senior citizens opted to take a reverse mortgage.  Last year about 100,000 seniors participated, and in 2007 it is projected to double. However, most people have a lot of questions that need answered before signing on the dotted line, including information regarding the Texas reverse mortgage rates.

In many ways, reverse mortgage rates are similar to the rates and initial fees you have to pay when buying a home.  First, for both actions a fee is assessed for appraisal, inspection, title etc. Whether you are getting a reverse mortgage for senior citizens or a traditional mortgage an organizational fee is charged.  However, on the average, the reverse mortgage interest rate is one percent higher.

Also, the average fees for a home mortgage differ at this point.  Reverse mortgage borrowers must have FHA mortgage insurance. On the contrary senior citizens opting for a reverse mortgage in Texas do not have to pay a commission to the realtor, but a new home owner has to pony up a fair amount of cash, when the sale is complete.

When all is said and done, the initial expenses to buy a house or taking a reverse mortgage is approximately 5% of the total amount of the appraised value of the home.  For example, if you home is deemed to be worth $200,000, you will have to pay $10,000.  While the fees are not taken out of the senior's pocket, the amount is figured in as part of the loan, which reduces the amount to be paid.

Like any other mortgage, you have to pay the interest rate on the monies borrowed.  With a fixed rate, the borrower pays the current interest rate, at the time of closing, for the life of the loan. Conversely, a variable rate fluctuates with the changes in the economy.  Therefore, under a reverse mortgage for senior homeowners, you can choose to have the rate change calculated monthly or on a yearly basis.

On a positive note, unlike a new home owner, the fluctuating rate will not affect how much you are given each month.  The difference comes after the house is sold.  Either it will have less equity or more, depending on the direction of the reverse mortgage interest rates.

Texas reverse mortgage rates are just one concern of many.  Before you accept a reverse mortgage, you are required to see a counselor, to make sure you know exactly what you are getting, as well as what you will be giving up. A reverse mortgage may be the exact retirement planning tool you need, to help you pay medical costs and still have a decent standard of living. On the other hand, it may not be what you expected.  So, keep asking the questions necessary to make the best choice for you.