Reverse mortgage loans are a popular financing option for Cedar Park, Texas, for senior homeowners to utilize their home’s equity.
The Home Equity Conversion Mortgage (HECM) is a federally-insured reverse mortgage program. Eligible homeowners who are 62 or older can convert a portion of their home equity cash. Because the money is considered loan proceeds instead of income, it is generally tax-free and can be received as a lump sum, monthly payments, a line of credit or a combination.
How Does a Reverse Mortgage Loan Work in Cedar Park, Texas?
Unlike traditional mortgages, reverse mortgage loans do not require monthly payments. Instead, the homeowner is responsible for property charges like taxes, insurance, and home maintenance. This can be a tremendous benefit for many.
The loan is repaid when the homeowner sells the home, permanently moves out or passes away. The proceeds from the sale of the home cover the outstanding loan balance. However, if the borrower’s heirs wish to keep the home, they have the option to purchase it at 95% of the appraised value.
People get reverse mortgages in Cedar Park, Texas, for many reasons, including:
Access To Home Equity
HECMs allow homeowners to tap into their home equity and convert it into tax-free cash. This provides a valuable source of cash flow for homeowners in a variety of financial situations.
No Monthly Mortgage Payments
HECM borrowers are not required to make monthly mortgage payments. Instead, they must take care of property charges like taxes, insurance and home upkeep. For those who own their homes outright before a HECM, their potential loan proceeds would simply be that much greater.
Flexibility
HECM borrowers have flexibility in how they receive their loan proceeds, including a lump sum payment, regular monthly payments, a line of credit or a combination of the above.
Maintaining Homeownership
With a HECM, homeowners retain ownership of their home exactly as they did before their reverse mortgage loan. As long as the borrower complies with the terms of their loan, the house is theirs to do with as they please and no one can make them leave or sell it.
Government Insurance Protection
HECMs are insured by the FHA which provides safeguards for borrowers, including a guarantee that the lender will continue to make payments even if the loan funds run out.
Non-Recourse Loan
HECMs are non-recourse loans. This means that the sale of the home pays off the loan balance, not the borrower or their heirs. For example, if the home’s value was lower than the balance of the loan at the time of the sale, the Federal Housing Administration (FHA) will pay the difference.
Interested in a Reverse Mortgage in Cedar Park, Texas
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*This advertisement does not constitute tax or financial advice. Please consult a tax and/or financial advisor regarding your specific situation.