A reverse mortgage is a very low interest loan available to elderly homeowners, many of whom would not qualify for a traditional loan due to income or credit requirements. If you familiarize yourself with the bare bones of the product, it will make your borrowing process smoother and more enjoyable.

Here are some of the most commonly asked questions regarding reverse mortgages:

Are there any age requirements for a reverse mortgage?

According to the FHA, the youngest borrower must be at least 62 years of age. There is no such thing as being too old to apply for the loan.

I still owe money on my house; am I still eligible?

Your house does not have to be free and clear, but you cannot have a loan balance that is more than 65 percent of the value of your house.

I don’t have the best credit score — is there a minimum credit score?

There is no minimum credit score; in fact, your credit will not be checked.

Can a reverse mortgage be outlived?

As long as one homeowner lives in the home, the reverse mortgage does not have to be repaid. Keep in mind — you still have to keep up with your taxes and insurance.

What happens when the final homeowner passes away and more money is owed than the home is worth?

When the last homeowner dies, the home can be passed to heirs or it can be sold and any excess equity will be left to the estate. In the event that the house is sold for less than is owed, the lender cannot take other properties or goods from the estate to make up the difference. In this event, the lender must absorb the loss.

Is there a limit on the amount that can be borrowed?

The amount one can borrow depends on the borrower’s age, current interest rate, and value of the home.

How is the money distributed?

The money can be distributed in the following ways. You can get a lump sum at closing, monthly payments as long as the home is occupied by the borrower, equal monthly payments for a fixed period, or a line of credit that allows any amount to be taken out until it is exhausted.

When considering a Reverse Mortgage in Texas, be sure to find a lender with consultants who specialize in reverse mortgages product.

The answer for many of our nation’s elderly workers may lie in accessing the equity that has built up in their home. This brings up the topic of risk and how risky it is to obtain a new loan on their home.

For workers 62 and older who have at least 50 percent equity in their home, a reverse mortgage just may be a lifesaver. With a HUD-approved reverse mortgage, homeowners have many options available to them. The most obvious is a reverse mortgage that offers a lump sum or a line of credit. Many think this is not a viable option, fearing income and credit requirements that are usually attached to any type of home loan.

A reverse mortgage in Texas has no income or credit requirements; you are just tapping into your home’s equity. The funds you receive never have to be paid back while you live in the home. Even if the value of your home drops and you find yourself owing more that the property is worth, those with a HUD-approved reverse mortgage do not have to worry. Your heirs will never be saddled with having to pay any money back. HUD will take care of any remaining money owed on the home, and your heirs will get whatever equity is left after the house is sold. Income from your reverse mortgage is also tax-free.

You should be aware that income from a reverse mortgage may affect your ability to qualify for need-based programs like Medicaid.

You can also arrange to have the money held, like an equity line, and you can take it out only when you need it. If you are older than 62, you may be looking at retiring soon, meaning you may need the money even if you are not laid off.

It’s a simple question with a varied and often complex answer. Perhaps you have a million dollars in various retirement accounts and other investments, but how do you know if it is enough? And if it isn’t, what do you do then?

If you have determined that today you need $5,000 a month to live comfortably, you need to determine how much you will need when you retire so you are able to keep up your current lifestyle.

Remember when a candy bar cost a quarter? What can you get for a quarter today? How far will today’s $5,000 a month carry you, twenty years from now? Your financial planner will use a calculation based on what you currently have for retirement, the rate of inflation, and the historical return on investments. The number he comes up with will be what you need to fund your retirement for your expected lifespan.

Should you come up short, your advisor will be able to come up with an approximate dollar figure you will need in order to make up for that shortfall. That figure will be based your ability to add new funds to your retirement, the rate of return on existent funds, and the number of working years you have left before you need to begin using those funds.

For many people, increasing the amount they can contribute to retirement isn’t an option, so they need another option. In Austin, a reverse mortgage is one solution to the problem.

Unlike the standard mortgage products, a reverse mortgage is easy to qualify for, as long as you meet the two basic requirements of minimum age and equity. Before you spend any time and money going the reverse mortgage route, make sure you qualify.

You must be at least 62 years old and must have a minimum of 50 percent equity in your home.

A reverse mortgage can give you the income you need to make up for a shortfall. You can never be “upside down” in your mortgage regardless of the value. One of the nice things about a reverse mortgage is that there are no income or credit minimums. Upon the death of the homeowners, the house goes to the estate.

Many senior citizens already own their home and property. A reverse mortgage takes the value of your home and makes it available in either one large sum or a series of smaller payments. For someone who has spent their working years building home equity, this can be a large financial gain. This works best for seniors because there is no traditional obligation to repay the mortgage, such as monthly payments. Instead, the loan is repaid when the owner is done with the house, typically either due to death or moving into a retirement home. At this point, the home is put up for sale and the proceeds pay off the loan that provided the reverse mortgage.

It is still the homeowner’s responsibility to maintain the home and keep up on taxes and insurance, but as these are expenses that are already being paid, the reverse mortgage is a relatively risk-free way to increase your income. Even better, if the value of your home naturally increases for any reason, you can often obtain additional reverse mortgages, providing even more money to fund your retirement.

* Please have the information listed below available at the time the application for a Reverse
Mortgage is completed:
* Original signed counseling certificate provided by third-party Reverse Mortgage Counselor.
* Photocopies of driver’s license and social security card, for each borrower.
* Copy of recent property tax statement and homeowners insurance bill.
* Original death certificate of spouse if a widow(er). This is needed only if deceased spouse
has not been removed from title to property.
* Names, addresses and account numbers for mortgage debt.
* If the property is held in a trust, please provide us with a copy of the trust agreement.
* If the person signing has Power of Attorney for the borrower(s), please provide us with a copy
of the Durable Power of Attorney.

When the loan is repaid, the borrower or their heirs pay off the loan balance which consists of; the financed closing cost and cash advanced from the interest that has accrued. The remaining Equity stays with the homeowner or their heirs.

* Use It as a Financial Planning Tool

* Supplement your Income

* Long-Term Care Insurance

* Pay off a Current Mortgage

* Travel More Frequently

* Pay off Debt, Buy a New Car

* College Tuition or Gifts to Family

The counseling session can be done either on the telephone or in person. The family or trusted friends are encouraged to participate. At the end of the meeting you will receive a Certificate of HECM borrower counseling.

1. You are at Least 62 years of age or older.

2. You occupy your home as your primary residence.

3. You have substantial Equity in your home (proceeds of the Reverse Mortgage must be used to pay off existing liens or mortgages).