A reverse mortgage is a loan from the U.S. Government for 50% to 75% of the value of a home owned by a homeowner aged 62 and older. Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to the homeowner. The funds from a reverse mortgage are tax-free. The loan doesn't have to be repaid in the homeowner's lifetime, however, when the homeowner dies, the money received plus approximately 4% interest is repaid by their estate. The loan is repaid when the homeowner ceases to occupy the home as a principal residence, due to the homeowner (the last remaining spouse, in cases of couples) passing away, selling the home, or permanently moving out.
A Texas Home Equity Conversion Mortgage (HELM), also known as a reverse mortgage, is a loan program designed to provide homeowners aged 62 and older with an opportunity to convert their home equity into cash, allowing them to supplement their retirement income, pay off existing debts, cover medical expenses, or simply enjoy a more comfortable lifestyle. In a Texas HELM, the homeowner borrows against the value of their home, and the loan is repaid when the homeowner no longer resides in the property. Unlike a traditional mortgage, the homeowner is not required to make monthly mortgage payments. Instead, the loan balance grows over time as interest accrues, and it becomes due when the homeowner sells the property, permanently moves out, or passes away. The Texas HELM program offers several types of reverse mortgages tailored to meet different needs: 1. Fixed Rate HELM: This type of reverse mortgage provides a lump sum payment at closing, allowing borrowers to receive a specific amount of cash upfront. The interest rate remains fixed for the entire duration of the loan. 2. Adjustable Rate HELM: With an adjustable rate HELM, borrowers have the flexibility to choose how they receive their funds, whether as a lump sum, a line of credit, monthly payments, or a combination of these options. The interest rate is adjustable based on market conditions. 3. HELM for Purchase: This option enables homebuyers to use a reverse mortgage to purchase a new home. It allows seniors to downsize or relocate to a more suitable property while eliminating the burden of monthly mortgage payments. 4. HELM Line of Credit: This choice allows homeowners to establish a line of credit that grows over time. The unused portion of the line of credit accrues interest, providing borrowers with access to additional funds if needed. Key features of a Texas HELM include: — No income or credit score requirements: As the loan is based on the value of the home, borrowers do not need to meet income or credit score criteria. The lender primarily considers the homeowner's age, home value, and repayment plan chosen. — Government backing and safeguards: Texas Helms are insured by the Federal Housing Administration (FHA), providing borrowers with additional protection. This insurance guarantees that the homeowner will receive the agreed-upon loan amount even if the lender defaults. — Repayment flexibility: Borrowers have the option to repay the loan at any time without penalty. They can sell the home, use other funds or assets, or allow their estate to repay the loan after their passing. Before obtaining a Texas HELM, homeowners are required to attend counseling sessions with a HUD-approved counselor to ensure they understand the terms, responsibilities, and potential risks associated with the loan. Overall, a Texas Home Equity Conversion Mortgage offers seniors a valuable financial tool to tap into their home equity, providing a means to secure their retirement years and access the funds they need to live a comfortable and financially stable life.A Texas Home Equity Conversion Mortgage (HELM), also known as a reverse mortgage, is a loan program designed to provide homeowners aged 62 and older with an opportunity to convert their home equity into cash, allowing them to supplement their retirement income, pay off existing debts, cover medical expenses, or simply enjoy a more comfortable lifestyle. In a Texas HELM, the homeowner borrows against the value of their home, and the loan is repaid when the homeowner no longer resides in the property. Unlike a traditional mortgage, the homeowner is not required to make monthly mortgage payments. Instead, the loan balance grows over time as interest accrues, and it becomes due when the homeowner sells the property, permanently moves out, or passes away. The Texas HELM program offers several types of reverse mortgages tailored to meet different needs: 1. Fixed Rate HELM: This type of reverse mortgage provides a lump sum payment at closing, allowing borrowers to receive a specific amount of cash upfront. The interest rate remains fixed for the entire duration of the loan. 2. Adjustable Rate HELM: With an adjustable rate HELM, borrowers have the flexibility to choose how they receive their funds, whether as a lump sum, a line of credit, monthly payments, or a combination of these options. The interest rate is adjustable based on market conditions. 3. HELM for Purchase: This option enables homebuyers to use a reverse mortgage to purchase a new home. It allows seniors to downsize or relocate to a more suitable property while eliminating the burden of monthly mortgage payments. 4. HELM Line of Credit: This choice allows homeowners to establish a line of credit that grows over time. The unused portion of the line of credit accrues interest, providing borrowers with access to additional funds if needed. Key features of a Texas HELM include: — No income or credit score requirements: As the loan is based on the value of the home, borrowers do not need to meet income or credit score criteria. The lender primarily considers the homeowner's age, home value, and repayment plan chosen. — Government backing and safeguards: Texas Helms are insured by the Federal Housing Administration (FHA), providing borrowers with additional protection. This insurance guarantees that the homeowner will receive the agreed-upon loan amount even if the lender defaults. — Repayment flexibility: Borrowers have the option to repay the loan at any time without penalty. They can sell the home, use other funds or assets, or allow their estate to repay the loan after their passing. Before obtaining a Texas HELM, homeowners are required to attend counseling sessions with a HUD-approved counselor to ensure they understand the terms, responsibilities, and potential risks associated with the loan. Overall, a Texas Home Equity Conversion Mortgage offers seniors a valuable financial tool to tap into their home equity, providing a means to secure their retirement years and access the funds they need to live a comfortable and financially stable life.
