What is a Reverse Mortgage

What is a Reverse Mortgage - Image
 
A reverse mortgage is a particular home loan where a homeowner aged 62 and older is allowed to convert part of their equity into cash. Equity is accrued over the years a homeowner makes mortgage payments, which is paid out in this loan program. 

However, a major distinction a reverse mortgage possesses when compared to more traditional home equity loans and second mortgages, is it doesn’t require repayment until the homeowner ceases to occupy their home in Houston as their primary residence. The loan is federally insured, with the United States Housing and Urban Development department providing the benefits of reverse mortgages. 

What's the difference between a reverse mortgage and a bank home equity loan?

Traditional second mortgages and home equity lines of credit demand homeowners have sufficient income against a qualifying debt-to-income ratio, plus monthly mortgage installments must be made. 

Yet reverse mortgages are paid to homeowners and made available regardless of income status. The total amount a homeowner is permitted to borrow depends on several factors, including:

•   Age
•   Current interest rate
•   Lesser of some appraisal value or FHA mortgage loan limit ($625,000 for Houston)
•   Initial mortgage insurance premium


Typically, the greater the value of a home, the older a homeowner is and the lower their interest leads to more being available for them to borrow. Remember, payments are not made on this loan as long as the homeowner maintains it as the principal residence. Real estate taxed are still required to be paid, plus utility bills. However, also remember, a property cannot be foreclosed on nor can a homeowner be uprooted from their house due to not making a mortgage payment.

Can the lender take my home away if I outlive the loan?
No, they cannot. Repayment is not required for homeowners so long they, or at least one of the borrowers remains in the house while keeping current on the taxes and insurance. A homeowner in Houston can never owe more than the value of their home.

Will I still have an estate that I can leave to my heirs?
An estate will repay the funding received from your reverse mortgage, interest and other various fees to the lender when the home is sold or the homeowner ceases utilizing it as their principal residence. Any remaining equity in the home in Houston will belong to the homeowner and their heirs. HUD’s reverse mortgage loan will not affect any other assets, nor will this debt be transferred to the homeowner’s estate or heirs.

Call First Financial Reverse Mortgages today at (281) 575-8050 or toll-free at (866) 974-1303 to learn more about reverse mortgages in Houston!  

Free Reverse Mortgage Analysis - Image


 
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