Older consumers looking to access home equity through a reverse mortgage will find that a new competitive climate has reduced out-of-pocket costs considerably according to the Star Telegram.
Starting October 4th, consumers will have access to the HECM Saver, which will allow access to just part of a homeowner’s equity at a reduced cost.
“Reverse mortgages are becoming more mainstream.” said Scott Norman, president of the Texas Mortgage Bankers Association. “A reverse mortgage is not for everybody, but every extended family in Texas has a member that could benefit from one.”
Reverse mortgages, which have been available in the state for 11 years, allow senior citizens 62 and older to convert equity in their house into tax-free income without having to sell the home, give up the title or take on a new mortgage payment. When the borrower leaves the house, the loan is either paid off or the property reverts back to the lender.
Reverse mortgages are starting to gain traction in Texas. The state’s seniors took out 7,495 reverse mortgages in 2009 for an average home value of $178,920, according to data from the bankers association. Over the past 10 years, there have been 35,702 reverse mortgages for a total value of $3.3 billion.