Reverse Mortgages Flying in Texas
The state of Texas has risen to be the third largest reverse mortgage market, with 30,000 loan sanctions totaling about $2.2 billion. The reverse mortgage loan volumes have increased by more than 208% between 2004 and 2008.
Just during the past two years, Texas senior home owners have taken more than $1.1 billion in reverse mortgages, based on figures from the Texas Association of Reverse Mortgage Lenders.
Reverse mortgages in Texas are kind of new phenomena as Texas was a late entrant in the arena of reverse mortgages. A dozen years ago, the Texas Legislature tried to allow reverse mortgages using an amended law passed in 1999 and even that took some time. The first reverse mortgage happened only in the year 2001.
Reverse mortgages allow home owning seniors aged 62 and above obtain loans in place of home equity. There are closing costs and fees involved. The senior borrowers retain titles to their homes during the life of a reverse mortgage. The reverse mortgage money can be taken in monthly payments and can be used for any reason, including vacations, paying medical bills, and purchasing cars. The money supplements Social Security Checks.
The loan can be repaid when the house gets sold. If the loans add up to higher than the worth of the home, the heirs are not liable for the excess amount.
The state of Texas has introduced stronger consumer protection factors on lenders than required by the national law. Seniors will need to receive counseling before paper work starts for a reverse mortgage. Reverse mortgages are allowed to be canceled within a period of three days after closing without any penalty. There is also a cap on the amount of loan origination fees.
