Helpful Information On Reverse Mortgages - part 2

by Carl Williams

You must, however, repay the loan upon your death or when the home is sold.

Reverse mortgages are not without their drawbacks, and they are not for everyone. While interest rates are comparable to conventional mortgages, there are high startup fees. Part of this is to insure the loan, which tends to be riskier than conventional mortgages, as the borrowers must be at least 62 years of age.

In addition, as the reverse mortgage draws upon the equity of the home, you could find yourself with no equity remaining if the value of your home should drop over time.

Reverse mortgages may become more popular in Texas and reverse mortgages will soon allow line of credit paymentsThose seeking a reverse mortgage or home equity loan in Texas were long disappointed, as Texas was one of the last states to allow such lending. Mortgage laws dating to the nineteenth century prohibited such lending, as the state's founders feared that lenders would take advantage of people and intentionally seize their homes through foreclosure. This made it virtually impossible for Texans to use their home equity for purposes of debt consolidation, home improvement, or other legitimate uses, as citizens of other states may do.In 1997, the Texas legislature finally amended the state constitution to allow home equity loans, but did so in an awkward, poorly worded way that left many questions unanswered. The new laws did allow for traditional term loans and lines of credit for home equity loans, and also allowed for lump sum payouts for reverse mortgages. The law did not allow for a line of credit for reverse mortgages, however, and that has created a problem.A reverse mortgage allows homeowners who are at least 62 years of age to borrow against the equity of their home by agreeing to pay back the money when the homeowner dies, sells the home, or moves. Reverse mortgages have been quite popular in recent years, particularly in areas such as California, where high real estate prices have left many homeowners short of cash but "equity rich." These people have been able to fund their retirements using the equity in their homes, purchasing vacation homes, recreational vehicles, or taking long-desired vacations. Nationally, nearly 90% of those who take out a reverse mortgage do so by utilizing a line of credit. This allows them to use the money when and how they see fit, and no interest accrues unless the money is actually used. It's a very convenient product, and it costs the homeowner much less in interest than a lump sum payment. Unfortunately for citizens of Texas, a lump sum payment is the only option, and as a result, very few reverse mortgages have been offered to date.This may soon change, however. The Texas Legislature has recently approved an amendment to the state constitution that will allow homeowners who take out a reverse mortgage to accept payment in the form of a line of credit. Texas law requires that this change be placed on the ballot for a referendum, and it is expected to be voted upon this fall. Those who work in the lending industry expect the vote to pass, and say that it will lead to a tremendous increase in the number of reverse mortgages offered in the state. With more than twenty million people, Texas ranks second only to California in population, and there are many people in Texas who would qualify for a reverse mortgage.By eliminating laws that have been on the books for more than one hundred and fifty years, Texas may soon join the rest of the states in having fair and equitable home lending laws.This might be of interest to those concerned about California adjustable pay mortgagemastersonline.com and that is why we have included this information.

Copyright (c) Carl Williams

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Related Reverse Mortgage Articles: Refinancing A Reverse Mortgage The reverse mortgage is primarily a resource for our senior population, and it has become a widely used financial instrument. Consider Different Reverse Mortgage Options There are many different reverse mortgage options: single purpose reverse mortgages, federally insured reverse mortgages, and proprietary (private sector) reverse mortgages. Reverse Mortgage - Be Sure You Need It Before Applying For One Reverse mortgages are useful tools for those who need extra cash during their retirement years. Be aware that there are costs associated with them and that they may not be right for you. Home Equity Loan - With A Reverse Mortgage, Your Home Pays You! Unlike a traditional home equity loan, a reverse mortgage requires no repayment for as long as you live in your home. An Overview Of Reverse Mortgages If you own a home, you know mortgage products have moved beyond the basic 30 year fixed option. Reverse mortgages are one such product and here is an overview.

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