When you purchase your home, you are making a significant financial investment. Over the years, as you continue to pay off your mortgage, you build equity. A Home Equity Conversion Mortgage (HECM) is a federally guaranteed reversed mortgage program that allows seniors 62 years of age or older to tap into that equity. A reverse mortgage is designed to help seniors transfer some of the equity they have built into cash. In some instance, seniors may wish to use a reverse mortgage to purchase a more suitable home. At TerraVista Mortgage, we understand that there are many reasons why you may be considering a reverse mortgage. It is our goal to educate our clients throughout San Antonio, Austin, and Corpus Christi so that they can determine if a reverse mortgage is the best choice for their financial goals.
Everyone who is interested in a reverse mortgage is in need of cash for some reason. For some individuals, this can be due to sudden unexpected expenses. Others may need additional cash for larger expenses such as home repairs or remodeling. Some may be interested in purchasing a new home entirely. There are many reasons why you may want to use a reverse mortgage. Some of the most common reasons include:
- To supplement social security payouts or other types of fixed income.
- To delay social security payouts.
- To remodel a home to be more accessible.
- To make vital repairs to an aging home.
- To pay monthly expenses such as groceries and medications.
- To pay for medical care or other live-in care.
- To purchase a new home that better meets your physical needs.
- To purchase a new home closer to family.
Once you have decided that a reverse mortgage is the right choice for your particular financial needs, you will have to determine the type of payout that makes the most sense for those needs.
Only fixed-rate reverse mortgages can take advantage of a lump sum payout. Note that you will only be able to withdraw up to a certain amount allowable under a first-year cap. In most cases this will be 60% of your HECM initial principal limit. By choosing a lump sum payout, you will automatically forfeit the other 40% of your principal limit.
Monthly payout options include fixed-term and tenure payouts. The tenure HECM payout is available to you each month for as long as you or your spouse occupies the home. The fixed-term payout option gives you a monthly payout for a predetermined period of time. Once your term reverse mortgage payout period is complete, you are still able to live in your home as long as you continue meet your obligations such as paying property taxes and homeowners insurance.
Line of Credit
A line of credit options allows you to withdraw cash at your leisure, as long as you don’t exceed your first-year cap in the first year. You are only charged interest on the funds you withdraw, and your credit line grows over time as you retain your HECM.
The team at TerraVista Mortgage is here to help seniors throughout San Antonio, Austin, and Corpus Christi explore their options and help them decide if a reverse mortgage is the right choice for them. Contact our team today for more information on reverse mortgages in Texas.