Reverse mortgages available
starting in October

Reverse mortgages will be available for the first time in Texas starting on October 1, and if the turnout at a recent seminar in San Antonio is any indication, the loans will be extremely popular. The seminar attracted a standing-room-only crowd—so many, in fact, that a second unscheduled seminar was held immediately after the first.

On August 31, the U.S. Department of Housing and Urban Development released Mortgagee Letter 0034, which modifies HUD procedures to allow reverse mortgages in the state. Texas voters first approved the constitutional amendment authorizing reverse mortgages in 1997, and clarifying legislation was passed in 1999.

"Senior homeowners now have another option when planning their retirement," said Scott Norman, executive director of the Texas Associating of Reverse Mortgage Lenders (TARML). "A reverse mortgage can help seniors manage the rising cost of prescription drugs, nursing care, or even property taxes."

Reverse mortgages allow a senior homeowners to tap into the equity in their homes. To be eligible, a borrower, as well as co-borrowers, must be at least 62 years old and own their own home outright or have only a small loan balance remaining. The homeowner borrows against the value of the home and receives loan proceeds tax-free according to a selected payment plan. No repayment of a reverse mortgage loan is required until the homeowner no longer occupies the home.

A borrower cannot be forced to sell or vacate the property to pay off the loan, even if the total of mortgage payments plus interest exceeds the value of the home. In Texas, a homeowner is required to obtain counseling from a HUD-certified reverse mortgage counselor before applying. More information and a list of counselors is available from TARML at 877/768-3927 or on the Web at www.texasreversemortgage.com.

09/14/00

 

Buyers & sellers, visit www.texasrealestate.com.
REALTORS®, visit www.tar.org.