...Back to Proposition Five
Arguments in Favor of Amendment Five
The San Antonio News-Express notes that Texas is the only state in the nation that does not allow home owners to use a reverse mortgage to purchase a new home. This amendment would make that possible. According to the Texas Legislative Council, supporters argue that there are a number of reasons why older homeowners may want to purchase a new home, whether to get out of a home that is too large for their needs and too difficult to keep up, or to move closer to children or other relatives or medical care. Making it possible for older homeowners, who may be property-rich but cash-poor to use a reverse mortgage to access the equity of their home for a down payment on a new home will make it easier and potentially save them thousands of dollars in real estate fees. The amendment would also require important disclosures be provided to seniors, as well as an opt-out opportunity twelve days before the loan closes.
Arguments in Opposition to Proposition Five:
A reverse mortgage is often seen as one of the best options as loans for elderly people, but they do involve some risks for borrowers. According to the information given by the Texas League of Women Voters, even after completing the required counseling that is part of the official requirements to allow customers get a reverse mortgage, customers still struggle deciding the best options for their reverse mortgage. Also, customers are often vulnerable for fraud and scams, which might lead them to lose their house. As reported in the US News and World Reports, unethical brokers may charge fees that are too high. Also, interest rates are usually higher than a more traditional home equity loan. Other amounts may be added to bills, such as insurance and maintenance. As a result, the amount the home owner receives may be much less than they expect. A reverse mortgage also means that the homeowner’s heirs will receive less or may even receive nothing at all from the property if it is worth less than the amount borrowed.