Reverse Mortgages in Texas: What They Are, How They Work, and Who They’re For
By Cat Totty | The Totty Team at Cardinal Financial
Reverse mortgages are one of the most misunderstood home loan options out there — and that’s a shame, because for the right homeowner, they can be an incredibly helpful financial tool.
I’ve found that most people hear the term “reverse mortgage” and immediately think of outdated myths, confusing ads, or something they should avoid. In reality, today’s reverse mortgages are highly regulated, transparent, and often used strategically as part of a larger retirement or housing plan.
Let’s break down what a reverse mortgage actually is, how it works in Texas, and the two most common ways people use it: to buy a home or to refinance their current one.
What Is a Reverse Mortgage?
A reverse mortgage is a home loan designed for homeowners age 62 and older that allows them to convert a portion of their home equity into cash — without a required monthly mortgage payment.
Instead of making payments to the lender each month, the loan balance increases over time and is typically repaid when:
The homeowner sells the home
The homeowner permanently moves out
The homeowner passes away
The most common reverse mortgage is the HECM (Home Equity Conversion Mortgage), which is insured by the FHA and governed by strict federal guidelines.
How Reverse Mortgages Work in Texas
Texas has some of the strongest consumer protections in the country when it comes to reverse mortgages.
Key Texas-specific rules include:
Mandatory counseling with a HUD-approved counselor
A required waiting period before closing
Limits on how much equity can be accessed
Strong protections for the homeowner and spouse
These safeguards are designed to ensure borrowers fully understand the loan and that it’s being used appropriately.
Benefits of a Reverse Mortgage
For the right borrower, a reverse mortgage can offer meaningful benefits, including:
No required monthly mortgage payment
Access to home equity without selling the home
Flexibility in how funds are received (lump sum, line of credit, or monthly payments)
Ability to stay in the home while aging in place
FHA protections and non-recourse features
Importantly, the homeowner retains ownership of the home and is still responsible for property taxes, insurance, and maintenance.
Buying a Home With a Reverse Mortgage (Yes, You Can)
One of the least-known but most powerful uses of a reverse mortgage is purchasing a home.
With a reverse mortgage purchase:
You buy a home using a large down payment
The reverse mortgage covers the remaining balance
No monthly mortgage payment is required
This option is often used by buyers who are:
Downsizing
Relocating closer to family
Buying a single-story or more accessible home
Wanting to preserve retirement savings
It allows buyers to purchase a home outright without taking on a traditional monthly mortgage payment.
Refinancing a Current Home Into a Reverse Mortgage
Another common use is refinancing an existing home into a reverse mortgage.
This can be helpful if you:
Still have a mortgage balance you want to eliminate
Want to improve monthly cash flow
Need access to equity for living expenses, healthcare, or long-term planning
Want to simplify finances in retirement
In many cases, the reverse mortgage pays off the existing loan first, and any remaining equity may be available to the homeowner depending on eligibility.
Common Misconceptions About Reverse Mortgages
Let’s clear up a few myths:
You do not lose ownership of your home
Your heirs are not automatically responsible for the debt
The loan cannot exceed the value of the home (non-recourse)
You are not “giving your house to the bank”
When structured correctly, reverse mortgages are designed to protect both the homeowner and their family.
Is a Reverse Mortgage Right for You?
Reverse mortgages are not one-size-fits-all — and that’s important.
They can be a great option for some homeowners and not the right fit for others. That’s why education and personalized guidance matter.
The right conversation should include:
Your long-term housing goals
Your income and retirement plan
How long you plan to stay in the home
How the loan fits into your overall financial picture
How The Totty Team Helps With Reverse Mortgages in Texas
At The Totty Team at Cardinal Financial, we approach reverse mortgages with the same mindset we bring to every loan: education first.
We help by:
Explaining how reverse mortgages actually work — in plain language
Reviewing whether a purchase or refinance makes sense for your goals
Walking through Texas-specific rules and timelines
Coordinating required counseling and documentation
Helping you and your family feel confident in the decision
Whether you’re exploring options for yourself or helping a parent plan for the future, my goal is clarity — not pressure.
Let’s Talk Through Your Options
If you’re 62 or older and curious about buying a home with a reverse mortgage or refinancing your current home into one, I’d be happy to walk through the details with you.
Cat Totty
The Totty Team | Cardinal Financial
Sometimes the right mortgage isn’t about buying more — it’s about living more comfortably in the next chapter.
