For more information go to Reverse Loan Guide or call Bob Heckler at (512) 328-2225.

If you are thinking about selling your home and downsizing in a couple of years or will need to move to an assisted living facility, a reverse mortgage probably isn’t your best option for cash. Texas Reverse Mortgage loans have sizable up front costs. The timeframe of your planning is critical - consider a cash out refinancing or home equity loan to tide you over until you sell.

Your reverse home loan mortgage has to be paid off, either in cash or when the house is sold. Although mortgage insurance ensures that you won’t owe more than your house is worth, it’s entirely possible to drain your home’s equity, leaving your children with little or nothing.

One reason is that when the loan comes due, the bill is for what you borrowed plus fees and interest, and rates on reverse mortgages are not fixed. The annual rate, recently 8.3%, is the rate on a one year Treasury bill plus 3.1 percentage points and 0.5 points for insurance. Over the life of the loan, your rate can’t rise more than five points. At today’s rate, a homeowner who borrows $100,000 would owe $222,000 in interest and principal in 10 years.

If leaving your home or money to the next generation is important, think twice. Talk to your children before applying for a reverse mortgage. Consider this option.. sell the house to your children and rent it back.