Questions and Answers
Important Questions and Answers
Basics of Reverse Mortgages
What is a reverse mortgage?
A reverse mortgage is a type of home equity loan for homeowners 62 or older that does not require monthly mortgage payments. The loan is repaid when the borrower sells the home, moves out permanently, or passes away.
How does a reverse mortgage work?
A reverse mortgage allows you to borrow money against the value of your home. You can receive funds as a lump sum, a line of credit, or monthly payments. There are no monthly repayments; instead, the loan is repaid when you leave your home.
Eligibility and Qualifications
Who qualifies for a reverse mortgage in Texas?
Texas homeowners who are 62 or older, live in their home as a primary residence and have substantial equity in the home can qualify for a reverse mortgage.
Can I get a reverse mortgage if I still have a traditional mortgage?
Yes, but you will need to use some of the proceeds from the reverse mortgage to pay off the existing mortgage.
How much money can I get from a reverse mortgage?
The amount depends on several factors, including your age, home value, equity in your home, and current interest rates. Call Brenda at 972-388-3338 and she will be able to tell you how much money you can receive from a reverse mortgage. Our information is free to you and there is no obligation or a sales pitch whatsoever.
What can I use the reverse mortgage funds for?
You can use the funds for anything you like – covering daily living expenses, medical bills, home improvements, travel, or any other expenses.
Can a reverse mortgage impact my Social Security or Medicare benefits?
No, the proceeds from a reverse mortgage don’t affect your Social Security or Medicare benefits.
Are reverse mortgage proceeds taxable?
No, the money you receive from a reverse mortgage is typically tax-free, as it’s considered loan proceeds and not income. However, you should consult with a tax advisor for your specific situation.
Costs and Repayment
What are the costs associated with a reverse mortgage?
Costs can include origination fees, closing costs, mortgage insurance premiums, servicing fees, and interest.
How is a reverse mortgage repaid?
A reverse mortgage is typically repaid by selling the home. The proceeds from the sale are used to pay off the loan and any remaining money goes to you or your heirs.
What happens to the reverse mortgage when I die?
When you die, the reverse mortgage must be repaid. Usually, your heirs will sell the home to pay off the loan.
Understanding the Risks and Benefits
Will I lose my home with a reverse mortgage?
No, you retain title and ownership of your home. The loan does not need to be repaid until you permanently leave the home or pass away.
What happens if I outlive my loan term?
A reverse mortgage does not have a set term. As long as you live in your home, you will not be required to make any repayments.
Is a reverse mortgage a scam?
No, a reverse mortgage is a legitimate financial tool. However, like any financial decision, it should be carefully considered and understood before proceeding.
What if my home's value decreases?
Reverse mortgages have a non-recourse feature, which means you or your heirs will never owe more than your home’s worth at the time the loan is repaid.
Can my spouse stay in the home if I pass away?
If your spouse is a co-borrower on the reverse mortgage, they can continue to live in the home even if you pass away.
Can I leave my home to my heirs?
Yes, your heirs can inherit your home, but they will need to pay off the reverse mortgage. Often, this is done by selling the home.
Specific Types of Reverse Mortgages
What is a Home Equity Conversion Mortgage (HECM)?
A HECM is a type of reverse mortgage that’s insured by the Federal Housing Administration. It’s the most common type of reverse mortgage.
What's the difference between a reverse mortgage and a home equity loan?
A home equity loan requires you to make monthly payments back to the lender, whereas a reverse mortgage does not require any payments until you leave your home.
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Lone Star Reverse Mortgage, Inc.
6105 Volunteer PL
Rockwall, TX 75032