Frequently Asked Questions

To learn more about our company, our products and what a reverse mortgage can do for you, please refer to our FAQs below. If you need additional information, please contact us at info@reversemortgagetx.net.

1. Who is Reverse Mortgage of Texas?
   Reverse Mortgage of Texas is one of the oldest reverse mortgage industry companies. We are a National Correspondent Lender of Financial Freedom, the largest reverse mortgage lender in the country, currently performing more than 70% of the reverse mortgages in the U.S. Financial Freedom is a subsidiary of Lehman Brothers Bank (NYSE: LEH). Financial Freedom produced reverse mortgages totaling $976 million in 2003 and chose Reverse Mortgage of Texas to be a National Correspondent Lender because of our company's financial strength and integrity.
   
   
2. Can I do a reverse mortgage if I already have a mortgage on my home?
   Yes, as long as your current mortgage doesn't exceed approximately 50% to 60% of the value of your home. If you already have a mortgage or any loan on your home, our reverse mortgage will pay off your existing mortgage or loan, eliminating your monthly payments.
   
   
3. How is the U.S. Government involved with reverse mortgages?
   In 1989, the U.S. Government established the reverse mortgage program through HUD. Its purpose was to enable seniors to stay in their homes and obtain cash or a lifetime income from equity built up in their home. That's important because many seniors find themselves trapped between fixed or declining income and increased medical costs and other expenses. Sponsored by HUD, reverse mortgages sponsored by HUD are the U.S. Government's response to the plight of "home rich" but "cash poor" seniors. Because it's a federal program designed to protect seniors' financial well-being, the government requires two important safeguards:
   
   A) A cap on fees and expenses - the interest rate and all fees associated with reverse mortgages are capped for your protection.
   
   B) Required counseling for suitability - HUD requires that anyone getting a reverse mortgage make sure it's right for them by receiving counseling from a nonprofit, HUD-approved counseling agency. This counseling can be done either in person or over the phone. The phone counseling takes 30-60 minutes and you will be issued a counseling certificate that is required before you can apply for a reverse mortgage. We can help you arrange this session.
   
   
4. Why is a reverse mortgage better than simply refinancing my current mortgage?
   There are two main reasons. First, a reverse mortgage doesn't require monthly loan payments. With a reverse mortgage, the principal and interest are not repaid until the borrower passes away or vacates the home for more than 12 consecutive months. If you are married, the principal and interest are not repaid until the surviving spouse passes away or both spouses are no longer living in the home. If one spouse has to go to a nursing home, the other spouse could remain in the home and not make any payments. Second, there is no income qualifying with a reverse mortgage. If you are 62 or older, you will qualify, regardless of your income or credit history. Traditional refinancing loans require you to qualify based on your income and credit history.
   
   
5. Could you give me an example of how a reverse mortgage works?
   Financial Freedom will loan you approximately 50% to 80% of the market value of your home at a low interest rate. This loan is not repaid until you pass away or vacate your home for more than 12 consecutive months. And the U.S. Government guarantees your loan to Financial Freedom.
   
   Here's an example: Let's say you are 65 and own a home valued $180,000 with an existing mortgage of $23,000. That existing mortgage has payments of $600 a month. If you get a reverse mortgage, you would receive the following:
   
   $60,000 TAX-FREE cash that you can receive as a lump sum or monthly income payments over your lifetime.
   
   Savings of an additional $600 a month because your $23,000 mortgage has been paid off.
   
   Your loan is for 50% of the value of your home ($90,000). The $90,000 allows you to pay off the existing $23,000 mortgage, with the balance (after closing costs) going to you in tax-free cash. No repayment is required during your lifetime as long as you or your spouse lives in your home. When you pass away, your children or heirs can sell your home and repay the reverse mortgage with the proceeds of the sale and keep the profits TAX-FREE. And remember, your reverse mortgage is a nonrecourse loan, so the balance due on your loan can never exceed the value of your home.
   
   
6. Are fixed rate loans available?
   Not at this time. The adjustable rate mortgage (ARM) features annual or monthly rate adjustments. The rate is tied to the one-year T-Bill. The actual rate on the loan is 1.5% to 2.1% above the one-year T-Bill rate. Interest is paid to the lender only when your home is sold or the mortgage is paid off.
   
   
7. Will I have to pay any fees out of pocket to obtain a reverse mortgage?
   No. Reverse Mortgage of Texas never asks you for any up-front money. The loan does require the same fees as a standard mortgage and these fees are rolled into your loan balance. These include a loan origination fee of 2% of your home's FHA appraised value or the FHA maximum loan limit in your county (whichever is lower), an appraisal fee, other ordinary closing costs, and the FHA mortgage insurance premium of 2%. A monthly servicing fee will also be charged and will be financed into the loan balance so you will not have to pay it in cash.
   
   
8. Are the closing costs and fees in a reverse mortgage high?
   No, because they are paid with "future dollars" in typically 15 to 20 years, not with today's dollars. There are no out-of-pocket, up-front fees paid by the borrower in a reverse mortgage through Reverse Mortgage of Texas.
   
   
9. How safe and secure are reverse mortgages?
   Reverse mortgages are sponsored by the U.S. Government through HUD. HUD tightly regulates the fees and expenses that can be charged on a reverse mortgage in order to protect you.
   
   
10. How will a reverse mortgage affect my heirs or children? I want to leave my home to them.
    Most children want their parents to enjoy their "golden years" and are happy that a reverse mortgage gives you the extra money to enjoy life. If your children want to live in your home after you pass away, they simply refinance the reverse mortgage into a traditional mortgage and assume ownership.
    
    If your children don't want to live there, they simply list your home for sale, accept the best offer and pay off your reverse mortgage at the closing. Your children keep the profits, TAX-FREE!! It's a win-win situation, because you and your children get to enjoy your home investment tax-free.
    
    
11. How long does the reverse mortgage process take? When will I receive my money?
    Generally, 45 to 60 days. However, we have closed loans within 30 days. The time it takes is determined by how fast you get us the required documents.
    
    
12. Why should I trust Reverse Mortgage of Texas?
    Because Financial Freedom and HUD do. We are an Approved HUD Lender and a National Correspondent Lender of Financial Freedom.
    
    

    What is Reverse Mortgage?
    Who is eligible?
    How Reverse Mortgage works?
    Why Reverse Mortgage?
    

    
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