A reverse mortgage is a safe, easy way to keep your home and receive money from it at the same time, turning part of your home's equity into usable cash for you.
As long as you live in the home and keep up with taxes and insurance, you do not have to repay the loan during your lifetime. To qualify, you and any co-borrower must be at least 62 years-of-age and own a home which is the borrower's primary residence.
There are no income or credit requirements to satisfy. This means only the home secures the reverse mortgage. The borrower (or estate) will never owe more than the reverse mortgage balance or value of the property, whichever is less, and no assets other than the home will be required to repay the loan balance.
The reverse mortgage must be settled when you either sell your home or permanently leave the residence. In the event of death, your heirs will have the choice to keep the house and repay the reverse mortgage from other assets, or sell the house and use the proceeds to repay the loan.
The borrower retains title to the home, and the remaining equity belongs to the borrower or their heirs. The borrower is responsible for taxes, insurance, and general upkeep.
See the step-by-step process of getting a reverse mortgage.
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Closing costs include the appraisal, title insurance, origination fee and recording fees. These items can be included in the reverse mortgage so you do not have to pay cash for them at or before time of closing.
Your reverse mortgage balance consists of the financed closing costs, the cash that was advanced to the borrower, service fees, and the interest that accrues over time. Money received from a reverse mortgage is considered to be a loan, not income. Therefore, the funds received are not subject to income tax and do not affect Social Security benefits or Texas Homestead Exemptions.
Consult your tax advisor for specific information about your personal taxes.