The Reverse Mortgage loan is secured by your home. To keep the loan in good standing, the home must serve as your primary residence. You have the right to sell and move at any time and of course, you keep any proceeds that exceed your loan balance. In the event you (and your spouse, if applicable) have passed on, your estate will inherit the home according to your wishes. Your estate will decide if they want to sell the house, refinance with another type of loan to pay off the reverse mortgage and keep the home or simply walk away. No obligation is passed to your estate to pay the loan, in any event.
When is my Reverse Mortgage payable?
When one of the following occur:
- The Borrower(s) move out of the home permanently. In the event the homeowner moves to a care facility, the loan is considered in good standing for a period of 12 months. In the event the homeowner moves back home within the 12 month period, the loan is fully reinstated and remains so indefinitely. If the homeowner does not return in the 12 month period, the home should be sold or refinanced.
- If the house is sold or title is transferred to another party (unless to an approved trust), the loan is payable.
- If the taxes are unpaid and the homeowner is unable to make arrangements to pay the taxes (after all options are exhausted), the loan becomes payable and the home will need to be sold or refinanced.
- If the homeowner does not keep the home insured and is unable to make arrangements to provide insurance coverage, the loan becomes payable and the home will need to be sold or refinanced.
- The home must be reasonably maintained. If the house falls into a state of extreme disrepair and the homeowner is unable to protect the home from further decay, the loan may become payable.
- Any of the above conditions may be cured by the homeowner after a determination has been made that the loan is in default. For example, if the homeowner is notified that insurance coverage is non-existent and as a result, the loan is deemed to be in default, the homeowner may cure the default by providing insurance coverage.
What Happens when one of the above items occur?
If it has been determined that a default has occurred, the homeowner will always be given the opportunity to cure the default (by paying the taxes or making required repairs, etc.) and reinstate the loan to good standing. In the event the homeowner is unable or unwilling to cure the default, it will be necessary to either sell the house or refinance with another type of loan. In the event the homeowner chooses to do neither and to simply walk away, that is the homeowner’s right and no liability will follow the homeowner as a result, including a bad credit rating. The reverse mortgage is a non-recourse (non-liable) loan.
What if I owe more on my reverse mortgage
than my house is worth?
Remember that the reverse mortgage is a non-recourse loan. You or your estate cannot be held responsible to pay the excess balance. And, the loan is a lifetime loan. If the loan balance comes to exceed the home value or the line of credit has been used up (if a line of credit was part of your loan from the beginning) or for any reason other than listed above, the loan continues for as long as you live in your home…period.
Call our Reverse Mortgage Specialist today at 1-888-636-1112