Texas is a popular retirement spot for many seniors. From the gulf coast to the big cities this enormous state has a lifestyle for everyone. Of the over 28 million people who call Texas home, 12% are over the age of 65.1
A common concern for retirees is outliving their savings. While the cost of living in Texas is lower than many states,2 seniors who choose to retire in in Texas still need to have a financial plan in place so they don’t unexpectedly run out of funds.
Last year 4,343 Texas homeowners tapped into their home equity using a reverse mortgage loan.3 Unlike a traditional mortgage, a reverse mortgage allows senior homeowners to access a portion of their equity without ever having to make a monthly mortgage payment.4 The loan proceeds are not taxed as income, or otherwise,5 and do not become due until the last borrower or qualifying non-borrowing spouse no longer occupies the home as their primary residence.
When choosing how to receive the funds from a reverse mortgage, the borrower can configure their payment to best fit their financial needs. A reverse mortgage payment can be set up as a line of credit, lump sum payment,6 or monthly payments. Setting up a line of credit with a reverse mortgage gives peace of mind to seniors by providing a financial cushion for unexpected expenses. The lump sum payment can be used to remodel or repair the home, or pay down other debts.7 Monthly payments are used to help supplement income and cover ongoing expenses.
If you are a homeowner, 62 or older, and looking for a way to supplement your retirement income a reverse mortgage may be right for you. Try our reverse mortgage calculator above to receive a quick estimate of how much you may be eligible to receive.
1 United States Census Bureau. Quick Facts Texas. https://www.census.gov/quickfacts/TX
2 Missouri Economic Research and Information Center. Cost of Living Data Series 2017 Annual Average. https://www.missourieconomy.org/indicators/cost_of_living/
3 U.S. Department of Housing and Urban Development. HUD FHA HECM single Family Portfolio Snap Shot. https://www.hud.gov/program_offices/housing/rmra/oe/rpts/hecmsfsnap/hecmsfsnap
The 4,343 total was obtained by adding the total number of loans funded each month in the state of Texas in 2017.
4 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
5 Generally, money received is not considered income and should be tax free, though you must continue to pay required property taxes. Consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.
6 The funds available to the borrower may be restricted for the first 12 months after loan closing, due to HECM reverse mortgage requirements. In addition, the borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.
7 Your HECM loan will accrue interest that together with principal will have to be repaid when the loan becomes due.