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Change in Texas Law May Make Reverse Mortgages More
Popular
Texas was one of the last states to allow homeowners to take
out home equity loans. Laws going back to the nineteenth century
strictly prohibited home equity lending, as legislators feared
that unscrupulous lenders would take advantage of homeowners for
the purpose of seizing their homes through foreclosure. This made
it impossible for citizens of the Lone Star State to use their
equity for home improvements, debt consolidation or paying
medical bills, as homeowners in other states may do.
In 1997, the Texas constitution was amended to allow
homeowners to borrow against their home equity. The amendment
allowed for traditional term loans, lines of credit, and reverse
mortgages, but did not allow a line of credit on a reverse
mortgage.
In a reverse mortgage, owners of homes who are at least 62
years of age may borrow against the equity in their home. They
need not pay the money back until they die, move or sell the
home. Reverse mortgages have become quite popular in the last few
years, especially in areas like California, where homeowners may
be cash poor but may have a lot of equity in their homes.
Nationally, nearly 90% of homeowners who take out a reverse
mortgage do so with a line of credit. In Texas, however, the only
options are a lump sum or monthly payments. There are several
advantages in taking a reverse mortgage in the form of a line of
credit, rather than a lump sum. The most significant is the fact
that interest is only due when money is actually drawn from the
credit line. This saves the homeowner substantial amounts of
interest over the life of the loan when compared to a lump-sum
payout. Reverse mortgages have been quite popular in Texas since
the law was changed to allow them, but lenders say that the
demand should increase substantially if lines of credit are
allowed.
The Texas Legislature has recently approved a constitutional
amendment that will allow lines of credit.for reverse mortgages,
and this amendment is expected to be on the ballot in Texas this
fall. This bill is expected to pass easily, and once it does,
Texas may become the leading state in the country for issuing
reverse mortgages.
©Copyright 2005 by Retro Marketing.
Charles Essmeier is the owner of Retro Marketing, a firm
devoted to informational Websites, including End-Your-Debt.com, a
Website devoted to debt consolidation
information and HomeEquityHelp.net, a site devoted to information
on home
equity loans.
 MORE RESOURCES updated Thu. February / 09 / 2012
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New HARP Could Help Up to 6.7 MillionNASDAQOther changes to the program were designed to make it easier for homeowners with private mortgage insurance (PMI) to refinance or to obtain a HARP mortgage refinance with a lender other than their current mortgage servicer. In addition, new limits were ...and more » |
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Boehner On Refi Plan: Bad Idea, Obama!Mortgageorbby MortgageOrb.com on Thursday 02 February 2012 Any hope for bipartisan support of President Obama's mortgage refinance proposal was squashed by House Speaker John Boehner, who dismissed the new initiative as a continuation of failed policies.and more » |
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