Many seniors in Dallas, Texas, use reverse mortgage loans to increase their cash flow while remaining the full owners of their homes.
How Does a Reverse Mortgage Loan in Dallas Work?
Homeowners aged 62 or older in Dallas, Texas, should learn more about reverse mortgage loans. They allow borrowers to access a portion of their home’s equity without selling the property or making monthly mortgage payments. Instead, homeowners only need to cover property-related expenses, like taxes, insurance and maintenance. As the money is considered loan proceeds, it’s tax-free.*
Eligibility depends on several factors, including the borrower’s age, property value, home equity and interest rates. Repayment of the loan is generally due when the borrower moves out of the home, sells the property or passes away. If the borrower passes away, their heirs have the right of first refusal to buy the property at 95% of the appraised value. If the heirs decide to sell the home, they receive any remaining profits after clearing the loan balance.
Our Reverse Mortgage Loans in Dallas, Texas
Home Equity Conversion Mortgages (HECMs)
HECMs offer homeowners 62 or older the opportunity to access a portion of their home’s equity as a lump sum, line of credit or monthly payments. HECMs are the most popular type of reverse mortgage loan, so much so that most people talk about HECMs when discussing reverse mortgage loans.
The only type of reverse mortgage backed by the Federal Housing Administration (FHA), one of the most significant benefits of HECMs is that they are non-recourse loans, meaning neither the borrowers nor their heirs are accountable for any amount exceeding the property’s market value at the time of sale.** Instead, the FHA covers the difference. The non-recourse feature can provide peace of mind to borrowers concerned about passing debt to their loved ones.
HECM for Purchase (H4P)
H4Ps are a reverse mortgage loan for seniors interested in purchasing a new home. With an H4P, a homeowner can combine the proceeds of the sale of their current home with a reverse mortgage loan on the new home, potentially increasing purchasing power by up to 200%.
This boost to purchasing power can allow seniors to move to more expensive areas and homes that would otherwise be beyond their financial means. Unlike traditional mortgages, monthly payments for H4P borrowers are optional. Instead, they must cover property charges such as taxes, insurance and home upkeep. Also, if the home’s value appreciates over time and exceeds the amount borrowed, homeowners or their heirs may receive any remaining equity after the home is sold.
Jumbo Reverse Mortgage Loan
Jumbo reverse mortgage loans are proprietary products for homeowners with high-value properties. With a HECM, the FHA sets a borrowing limit of $1,089,300.
With a jumbo reverse mortgage loan, homeowners can borrow against the entire property value, sometimes up to multiple millions of dollars, enabling them to receive significantly more proceeds than they could get with a HECM. As jumbo reverse mortgage loans are proprietary products, the terms can differ from lender to lender.
Dallas Reverse Mortgage Loan Benefits
There are many benefits to reverse mortgage loans for retirees in Dallas, Texas, such as:
Access To Home Equity Without Selling or Making Obligatory Monthly Payments
Having a substantial amount of home equity can provide peace of mind. However, it’s an illiquid asset that typically can’t be accessed without selling the home or taking on a new loan that requires monthly payments.
Reverse mortgage loans enable homeowners to access a portion of their home equity without the obligation of monthly mortgage payments. Instead, borrowers are responsible for property-related expenses such as taxes, insurance and home upkeep costs.
FHA-Insured With Non-Recourse Feature
Insured by the FHA, home equity conversion mortgages (HECMs) provide added security for homeowners and their heirs. As non-recourse loans, borrowers and their heirs are not responsible for any outstanding loan balances beyond the home’s value at the time of sale.**
For instance, if a homeowner takes out a HECM when the housing market is at its peak but sells their home years later when the market has declined, neither the homeowner nor their heirs pay the difference. Conversely, if the property’s value appreciates further over time, the homeowner or their heirs retain any remaining equity after clearing the loan via the home sale.
Buffer Strategy and Portfolio Hedging
Many retirees use their reverse mortgage loan proceeds as a financial buffer.* Reverse mortgage loans allow retirees to tap into their home equity to cover unexpected expenses or to supplement their retirement cash flow in down markets, helping them avoid selling investments at a loss and depleting retirement savings.*
Funding Long-Term Care (LTC)
LTC is of great concern to many seniors because it’s impossible to know if there’s enough money set aside to cover eventual needs. The proceeds from a reverse mortgage loan can be applied to any aspect of LTC that a borrower sees fit, from making home modifications for aging in place to paying for in-home care. Many borrowers also use their reverse mortgage loan proceeds to fund life insurance plans that cover LTC expenses.*
Owning the Home
Reverse mortgage loan borrowers retain full ownership of their homes, just as they did before taking the loan. As long as the borrowers fulfill the loan terms, they can stay in the home, make upgrades, renovate it and sell it whenever they wish, and no one can make them leave the home.
Flexibility
Borrowers have a great deal of choice in how they receive their proceeds, including a lump sum payment, monthly payments, a line of credit or a combination of options. Borrowers have complete control over how they spend or invest their proceeds.*
Interested in a Reverse Mortgage Loan in Dallas, 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. **There are some circumstances that will cause the loan to mature and the balance to become due and payable. Borrower is still responsible for paying property taxes and insurance and maintaining the home. Credit subject to age, property and some limited debt qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.