Advantages of a Reverse Mortgage in San Antonio, Texas

Advantages of a Reverse Mortgage
By Dennis Estrada

Using reverse mortgage, any sixty-two years old or over can convert the home equity into cash. The mortgage lenders give the cash by lump sum payment, several payments, credit line, or combination. Here are the common advantages of reverse mortgage.

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The History of Reverse Mortgages and Why They Are So Popular Today in San Antonio, Texas

Reverse mortgages have been around since 1961. The first person to receive a reverse mortgage was Nellie Young through the Deering Savings and Loan Bank of Maine. At that time, the reverse mortgage was issued through the bank itself and any bank could choose whether or not they would do a reverse mortgage. Not a lot of people took advantage of reverse mortgages because there was nothing to guarantee that a bank wouldn’t take advantage of them. Banks also found some risk in doing reverse mortgages because there was nothing to guarantee that the borrowers fully understood what they were doing when taking out this reverse mortgage. The whole system still had a few issues to be worked out.

In 1988 the federal government stepped in and worked out a new law with the AARP to help increase the use of reverse mortgages under government supervision. The law was the Federal Housing Authority Insurance Program where 50 different lenders were chosen across the country to participate in giving out reverse mortgages. It wasn’t until 1989 that the first government supervised reverse mortgage was given out.

As people learned about reverse mortgages, they became more popular. In 1998 the pilot program became an official program that all lenders could participate in. The reason reverse mortgages became so popular is because they allow senior citizens who own a home and have retired to access the equity of their home without any real risks to them. When they are no longer living in the home for whatever reason, the house is then either sold or the family can choose to refinance the mortgage. If the house doesn’t sell for the amount that the reverse mortgage was for, there is no obligation to pay back the difference.

The way that an elder receives their money is completely up to them. They can get a line of credit where they can use the money from the bank as needed. This method will give them the most amount of money for their home. They can also take out the reverse mortgage as a lump sum, although the interest fees they will have to pay on it will be higher than the other options. The most common method of receiving payment from a reverse mortgage is to get a monthly payment. This payment will continue for as long as the person is alive, no matter how long they live or what the amount of the loan was.

There are a few stipulations to receiving a reverse mortgage, although for most people they aren’t a problem. The minimum age a person must be to get a reverse mortgage on their home is 62. They also must not have a current mortgage on the house or they will have to use a portion of their reverse mortgage to pay off the first mortgage. They will also have to go to financial counseling to assure the lender that they are fully aware of what the terms of the loan are and that they can meet their financial responsibility.

Saving Seniors Homes from Foreclosure in San Antonio, Texas Using a Reverse Mortgage

With the economy in the state it’s in today, more and more people are being faced with the possibility of foreclosure. Many people are finding their mortgage payments harder to make each month, and this is especially true for seniors. Many seniors rely on their retirement funds or Social Security benefits to help pay their mortgages, and those accounts sometimes just aren’t enough to keep up. There’s nothing more disheartening than having a home that you’ve worked for years to pay off pulled out from under you.

Fortunately, there are several ways to fend off foreclosure on a home. One of these options that is specific to seniors is a reverse mortgage. It may sound like it wouldn’t be much help since “mortgage” is right in the name and that’s what you’re trying to get rid of – but it really may be the answer to your foreclosure problem.

Reverse mortgages are only available for people of age 62 or higher. A reverse mortgage is somewhat like a home equity loan in that you’re taking out money against your home’s equity. That might not sound terribly useful to someone who still owes money on their home, but a reverse mortgage can actually be taken out on a home that is still being mortgaged. In most cases, a reverse mortgage provides enough of a loan to pay off a primary mortgage and still have money left over.

It is important to note that you can only use a reverse mortgage in this way if the loan will provide enough money to pay off the primary mortgage. In other words, the reverse mortgage has to be the primary lien. Fortunately, unless the home has seen a drastic drop in value or you’ve just taken out a mortgage, this is not a difficult condition to meet. In most cases, you’ll even have access to some extra money that you can put toward home renovations or just save for an emergency.

A reverse mortgage does not come due until the borrower moves out of their home, sells it, or passes away. If the home is sold, the proceeds from the sale are applied against the reverse mortgage. One thing that’s nice is that if proceeds from the sale aren’t enough, then there’s no personal liability for the borrower or their heirs. If the loan ends because the borrower passed, the heirs also have the opportunity to refinance the home.

Reverse mortgages can provide a powerful solution to your foreclosure woes. Now that you have the basic idea, be sure to do some research so that you fully understand the these loans.