Reverse Mortgages: Frequently Asked Questions in San Antonio, Texas

Part One of Two

What is a reverse mortgage?

A reverse mortgage is a special type of mortgage that’s only available to people ages 62 and older. In a normal mortgage, a bank or other financial institution provides a loan to help a person or family buy a home, and the borrower pays back money each month. With a reverse mortgage, money is taken out against a home and paid to the borrower in one lump sum or in monthly payments.

How is a reverse mortgage paid back?

All payments on a reverse mortgage are deferred until the borrower dies, leaves their home or sells their home. Then, many different things can happen. If the home is sold, then the proceeds from the sale can be applied against the reverse mortgage. If the proceeds aren’t enough to cover the cost of the loan, then the lending institution pays the rest. If the proceeds exceed the amount of loan, then the extra moneys goes to the borrower. In the case of the borrower’s death, the borrower’s heirs can either refinance the house or sell it under the same conditions outlined above.

What can the money from a reverse mortgage be used for?

Money from a reverse mortgage can be used for anything at all. Most often, people take out reverse mortgages to supplement a dwindling retirement account. However, one might also take out a reverse mortgage to pursue a lifelong dream or spend some time traveling before settling down for good. Reverse mortgage funds might also be used for home repairs or even to prevent a bank from foreclosing on a home.

How do I qualify for a reverse mortgage?

Most standard types of homes qualify for reverse mortgages. Single family homes, properties with 2-4 units, condos, townhomes, and manufactured homes can all work for reverse mortgages. In some cases, you may even be able to take out a reverse mortgage on a home that still has a traditional mortgage. There are no special requirements for borrowers in terms of medical health or personal income.

How much money can you get from a reverse mortgage?

The amount of money that can be received from a reverse mortgage is dependent on the age of the homeowners, the value of the home, and the current interest rates. The general rule is that the more one’s home is worth and the older they are, the more money they can get. The money can be paid in any number of ways, including monthly payments, a single lump sum, and a flexible line of credit.