What is a Reverse Mortgage
A reverse mortgage allows homeowners 62 years or older to convert part of the equity in their homes into tax-free cash without having to sell the home, give up title, or make any monthly mortgage payment. This loan got it’s name because the payment stream is “reversed”. Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.
How Much Money Will I Receive?
The amount of money that you are eligible to receive depends on your age (or the age of the youngest person on title), the appraised value of your home, interest rates, and the FHA lending limit in your county. Generally, the older your are and the higher the value of your home, the more money you will receive.
How Do I Qualify for a Reverse Mortgage?
You must be 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds for the reverse loan, and you must live in the home. You are also required to receive consumer counseling, from a HECM (Home Equity Conversion Mortgage) counselor prior to obtaining the loan. You can find a HECM counselor online or by calling Pulse Funding of Texas at 512-266-3800.
How Do I Get Paid On A Reverse Mortgage?
The cash you get from a reverse mortgage
- All Cash Draw – At time of closing
- Tenure - Equal monthly payments for as long as the borrower lives and continues to occupy the property as a principal residence.
- Term - Equal monthly payments for a fixed period of months
- Line of Credit - Receive the mortgage proceeds in unscheduled payments or in installments, at times and in amounts you choose
- Modified Tenure - Combine a Line of Credit with monthly payments for life
Do I have to Repay A Reverse Mortgage?
Repayment is not required until one of the following occurs:
- You sell the home
- The last surviving borrower no longer occupies the property as their primary residence. This does not apply if the borrower is not residing in the property due to health reasons, up to a maximum of 12 months.
- The last surviving borrower dies
- The borrower violates the mortgage covenants
If anyone of the above occurs, then the outstanding balance becomes due and payable. The outstanding loan balance owed on a reverse mortgage equals the total of all loan advances the lender has paid to the borrower or on the borrower’s behalf. If the borrower (or estate) will not be retaining ownership of the property, the property may be sold for at least the lesser of the unpaid mortgage balance or appraised value.
Our Reverse Mortgages
We arrange two types of FHA Reverse Mortgage, also known as the HECM (Home Equity Conversion Mortgage to purchase or refinance.
- HECM ARM – Tied to the 1 Month LIBOR
- HECM Fixed Rate