Office Locations

Dallas/Ft. Worth
Houston
San Antonio
Ausin - Corporate Headquarters
6500 Riverplace Blvd., Bldg #1, Suite 200
Austin, Tx 78730

Find out how much money you can get from a Reverse Mortgage.
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Questions and Answers

1. Who is John Mitchell and Reverse Mortgage of Texas?
   
   
2. Can I do a Reverse Mortgage if I already have a mortgage on my home?
   
   
3. How is the U.S. Government involved with reverse mortgages?
   
   
4. Why is it better to do a reverse mortgage versus simply refinancing the house with a traditional mortgage?
   
   
5. Could you give me an example of how a reverse mortgage works?
   
   
6. Are fixed rate loans available?
   
   
7. Will I have to pay any fees out of pocket to obtain a reverse mortgage?
   
   
8. Are the Closing Costs and Fees for a reverse mortgage high?
   
   
9. Are there any restrictions on the use of the money I will receive?
   
   
10. Will I have to sell or vacate my home if the money I owe on the loan exceeds the value of my home?
    
    
11. Will my heirs owe anything to the mortgage lender?
    
    
12. If my home’s value appreciates during the mortgage term of a reverse mortgage, who will be entitled to that money?
    
    
13. How much can I borrow?
    
    
14. Will reverse mortgage payments affect my Social Security or Medicare benefits?
    
    
15. What if I decide to sell my home?
    
    
16. What appreciation or rise in my home’s value should I conservatively anticipate over the years of a reverse mortgage?
    
    
17. How safe and secure are reverse mortgages?
    
    
18. Will a reverse mortgage hurt my heirs or children; “I always wanted the house left for their benefit”?
    
    
19. How long does the reverse mortgage process take? When should I receive my money?
    
    
20. Why should I trust your company, Reverse Mortgage of Texas?
    
    
21. Who is eligible for a reverse mortgage?

1. Who is J. S. Mitchell and Reverse Mortgage of Texas?

   John Mitchell is a CPA and founder of Reverse Mortgage of Texas, one of the founding companies of the reverse mortgage industry in Texas. Reverse Mortgage of Texas is blessed to be the largest reverse mortgage company in the state. The significance of this is that it provides a level of credibility and peace of mind to know that you are dealing with the #1 company in the state for reverse mortgages.
   
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2. Can I do a Reverse Mortgage if I already have a mortgage on my home?

   Yes. As long as it doesn't exceed approximately 45%-75% of the value of the home. If you already have a mortgage, a reverse mortgage will pay off your existing mortgage (and thereby make your monthly mortgage payments go away) and you will also receive an additional amount of cash at closing depending on the amount of the existing mortgage that is being paid off.
   
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3. How is the U.S. Government involved with reverse mortgages?

   Because of the lobbying efforts of AARP in the 1980's, the U.S. Government established the reverse mortgage program through HUD in 1989. It’s purpose was to provide a means for seniors to stay in their homes for the rest of their lives but obtain cash or income from the equity they built up in their home over the many years of making that monthly mortgage payment. The government did this for seniors because their earning capacity diminishes as they get older yet, due to rising medical costs as we age, expenses often go up.
   
   Reverse Mortgages sponsored by HUD is the U.S. Government’s response to the plight many seniors faced with being “home rich” but “cash poor”. It should be noted that the absolute last thing the government wants is a seniors program that takes advantage of seniors. For that reason, the U.S. Government has put in two very important safeguards.
   
   
   1. Cap on fees and expenses - the interest rate and all fees associated with reverse mortgages have caps on them to protect seniors.
      
      
   2. Required counseling for suitability - HUD requires that anyone getting a reverse mortgage make sure it’s right for them by getting “counseling” from a non-profit, approved counseling agency.
      
      The counseling usually takes 45-60 minutes and the person is issued a counseling certificate.
      
   
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4. Why is it better to do a reverse mortgage versus simply refinancing the house with a traditional mortgage?

   Two reasons a reverse mortgage is better;
   
   First, with a reverse mortgage the senior doesn’t have to make monthly mortgage payments. With a traditional mortgage, monthly payments are required. Remember, with a reverse mortgage the principal and interest is not repaid until the borrower dies. If a married couple does a reverse mortgage, both must die ( or permanently move out of the house ) before the reverse mortgage must be repaid.
   
   The second reason a reverse mortgage is better is because there is no “income or credit qualifying” with a reverse mortgage. If the person is 62 or older, he/she qualifies irrespective of his/her income. With a traditional mortgage, a person must have good credit and qualify from an income standpoint to support the borrower’s ability to make the monthly mortgage payments.
   
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5. Could you give me an example of how a reverse mortgage works?

   Through a U.S. Government program you can obtain a loan for approximately 45%-75% of the value of your home and you never have to repay the loan in your lifetime as long as you live in your home. The only requirement is that you must be 62 or older and own your own home. There is no "good credit" or income requirement to obtain the loan.
   
   Here’s an example: Let’s say you are 71 and own a house with a value of $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:
   
   
   1. $60,000 cash: You would receive about $60,000 in cash that would be paid to you immediately or in monthly payments.
      
      
   2. $600 a month existing mortgage payment goes away: You no longer have to pay that $600 a month payment because the existing $23,000 mortgage is paid off when you get a reverse mortgage. This is accomplished by the U.S. Government program loaning you 50% of the value of your home ($90,000) via a reverse mortgage. With the $90,000, you would then pay off the existing $23,000 mortgage on the house with the balance ( after closing costs ) going to you in cash.
      
      As to repayment of the reverse mortgage loan, no repayment is required during your life time as long as you continue to live in your home. Upon your death, the reverse mortgage ( principal and interest ) must be paid by your estate.
      
      You get cash today and don’t have to repay that cash in your lifetime. That’s what makes a reverse mortgage so unique.
      
      Further, you retain 100% ownership in the home and you and your heirs get all the future appreciation in value of your home. And, best of all, the only requirement is that the homeowner simply must be 62 or older. That’s it; there are no other requirements.
      
   
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6. Are fixed rate loans available?

   There are fixed rate as well as adjustable rate reverse mortgages. Normally interest rates on reverse mortgages are lower than conventional home mortgage rates and equity loan rates because they are government insured loans.
   
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7. Will I have to pay any fees out of pocket to obtain a reverse mortgage?

   No. But there are fees to get a reverse mortgage and they will be added to your loan balance so that you do not have to pay them at closing. On average, these fees that are added to the loan run $6,000 - $10,000 and can be more for higher value houses.
   
   There are no out-of-pocket costs; all fees are similar to a traditional home mortgage loan. There are no unusual fees associated with a reverse mortgage.
   
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8. Are the Closing Costs and Fees in a reverse mortgage high?

   They used to be high. But in early 2010 the fees were greatly reduced due to the fact that the lenders have agreed to pay either the origination fee or the mortgage insurance for the borrower. Additionally, lenders eliminated the monthly service fee. For these reasons, the cost of reverse mortgages have been greatly reduced, on average by about $8,000.
   
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9. Are there any restrictions on the use of the money I will receive?

   It is your money and how you spend it is completely up to you!
   
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10. Will I have to sell or vacate my home if the money I owed on the loan exceeds the value of my home?

    Absolutely not! As long as you continue to live in your home as your primary residence, you will never be asked to sell or move out of your home.
    
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11. Will my heirs owe anything to the mortgage lender?

    Your heirs may either repay the full loan and keep the house in the family or sell the property at its “fair market value”.
    
    No additional financial claims may be made against your heirs or estate because the reverse mortgage loan is non-recourse, which means that if the loan amount is greater than the home’s value upon the sale of the property, any outstanding debt balance will be forgiven.
    
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12. If my home’s value appreciates during the mortgage term of a reverse mortgage, who will be entitled to that money?

    Under the terms of the reverse mortgage, you are legally required to pay back only the outstanding balance of your loan. You or your heirs are entitled to any and all appreciation in the value of your home that exceeds the loan balance.
    
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13. How much can I borrow?

    The maximum amount that can be borrowed is based on a HUD formula that factors in the age of the youngest borrower, the average expected interest rate, the anticipated rate of your home’s appreciation, and the current value of your home within the FHA insured limits for your area.
    
    Upon request, a summary is available for your home and the amount of payment you’re now entitled to. Typically a person can borrow about, for general purposes, 50%-75% of the value of their home. For a person 70 years old, they can receive about 54% of the value of the house. If you are older than 70, you can receive a higher percentage. If younger, a slightly lower percentage.
    
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14. Will reverse mortgage payments affect my Social Security or Medicare benefits?

    Monies received will not affect eligibility for retirement, survivor, disability, or Medicare benefits payable under the Social Security Act. For means based programs like Medicaid, a reverse mortgage can effect one's qualifications for such programs.
    
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15. What if I decide to sell my home?

    If you choose to sell your home, the outstanding reverse mortgage loan balance will have to be paid at closing. You or your estate will receive any proceeds exceeding the loan balance.
    
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16. What appreciation or rise in my home’s value should I conservatively anticipate over the years of a reverse mortgage?

    A HUD and FHA formula has historically been about 4% each year. It should be noted that approximately the first 3%-4% of appreciation in your house each year will cover the interest being added to your loan by the reverse mortgage.
    
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17. How safe and secure are reverse mortgages?

    Reverse mortgages are insured by the U.S. Government through HUD The fees and expenses that can be charged on a reverse mortgage are tightly regulated by HUD in order to protect the senior.
    
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18. Will a reverse mortgage hurt my heirs or children; “I always wanted the house left for their benefit”?

    Often heirs and children want the senior citizen to have the best quality of life available. Heirs and children will still benefit from the remaining home equity, future home equity, and the rise in the value of your home.
    
    Most seniors don’t want to be a burden to their children or heirs; a reverse mortgage gives financial independence and control to the senior. The heir or children of the senior continues to be the best referral of a Reverse Mortgage Program.
    
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19. How long does the reverse mortgage process take? When should I receive my money?

    Normally it takes 35 to 45 days.It can be longer if there are titles issues or unusual circumstances.
    
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20. Why should I trust Your company, Reverse Mortgage of Texas?

    Reverse Mortgage of Texas is an Approved Direct Lender by Fannie Mae and HUD and is one of the founding companies in the reverse mortgage industry in Texas. The reverse mortgage process is a standard process throughout the country.
    
    The principal of our company is a CPA and we employ senior citizens that have completed and received a reverse mortgage; their experiences may assist you. This is our exclusive business; we do nothing but reverse mortgages.
    
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21. Who is eligible for a reverse mortgage?

    The only requirement is that the homeowner is 62 or older. Regarding the home itself, the only requirement is that existing mortgages ( if any ) cannot exceed about 50%-75% of the value of the home, the home meets FHA standards, and the title of the home is in the name of the person who lives there.
    
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Myths

• The Bank owns my house.
  
  False. The homeowner retains title to the property and can choose to sell the home at anytime. The homeowner retains all future appreciation in the home.
  
• I must have good income and credit to qualify.
  
  False. A Reverse Mortgage has no income or credit qualifications. The qualifications are that you be at least 62 years of age, the home is your primary residence and that the home has enough equity.
  
  
• My children will be resposible for repayment of the Reverse Mortgage.
  
  False. The Reverse Mortgage is a non-recourse loan, which means the bank can never come after any person or estate for repayment of the loan. The bank can only receive payment of the loan from the value of the home.
  
  
• To qualify my home must be "Free & Clear".
  
  Not True. You may payoff a mortgage or equity loan with a Reverse Mortgage. In Fact many people get a Reverse Mortgage to payoff their current mortgage to eliminate their monthly payment.
  
  
• The Reverse Mortgage requires that I make monthly payments.
  
  Not True. There are never any monthly payments. Payment of taxes, insurance and general upkeep of the home are the only resposibilities of the homeowner.
  
  
• Only the "cash poor" or desperate senior citizens can benefit from the Reverse Mortgage.
  
  Even though some seniors may have a greater need than others for the cash or monthly income, the Reverse Mortgage can also be an excellent financial or estate planning tool.