What about repaying a Reverse Mortgage Loan?

The very nature of a reverse mortgage loan can be confusing. With a reverse mortgage loan, lenders pay you either in monthly installments, with one lump sum, a line of credit or as a combination of a line of credit and monthly installments. The following lists provide information regarding repayment of a reverse mortgage loan.

A reverse mortgage loan comes due when under the following conditions:

• Death of the homeowner or last surviving eligible non-borrowing spouse
• Upon sale of the home by the homeowner
• If the borrowers vacate the home. * The home must be the primary residence for more than half the year, though there can be exceptions for extended stays in a medical facility.
• Upon an instance of default.

Like all loans a reverse mortgage loan does carry conditions in order to remain valid. Reasons a borrower may find themselves in default include:

• Failure to pay property taxes
• Failure to keep the home in good repair
• Failure to insure the home
• Abandonment or donation of the home

When the reverse mortgage loan becomes due there are many options for paying it off.

1. Proceeds from the sale of the home
2. The homeowner or heirs simply payoff the loan or refinance the home in order to pay off the loan.
3. The heirs can hand the keys to the bank and the bank can sell the home in order to get the money that is owed. If there is equity left over after the property is sold, the heirs are still entitled to that. If the there is a deficit balance, the bank is made whole by the FHA insurance and the heirs are not liable, nor is the decedent’s estate.

For example, the family can sell the home and use the proceeds from the sale of the home to pay off the balance, and the remaining net equity can be given to the heirs. The homeowner or heirs of the homeowner can refinance the loan or pay it off using other means.
And, the heirs can simply turn the keys over to the bank if the borrower died owing more than the home is worth. There are other options and other special protections for the borrowers and their heirs. Call us today to discuss your particular situation.

To apply for your reverse mortgage loan click here.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.