The repayment of a reverse mortgage
Camille Patterson
Let me help you with your bookkeeping and accounting records so you can focus on your business operations.
A reverse mortgage is a type of home loan that allows homeowners to convert a portion of their home's equity into cash without having to make monthly mortgage payments. The loan is paid back when the last borrower on the loan either passes away or permanently moves out of the home.
When it comes to repayment on a reverse mortgage, there are several important things to keep in mind. First, the loan must be repaid in full when the last borrower on the loan either passes away or permanently moves out of the home. This typically means that the home will need to be sold in order to repay the loan.
If the proceeds from the sale of the home are greater than the amount owed on the reverse mortgage, the remaining equity will go to the homeowner or their heirs. If the proceeds are less than the amount owed, the lender is generally not allowed to seek additional repayment from the homeowner or their estate.
However, there are several options available to heirs when it comes to repaying a reverse mortgage. The first option is to sell the home and use the proceeds from the sale to repay the reverse mortgage. If the home sells for more than the outstanding loan balance, the remaining equity will go to the heirs. If the home sells for less than the outstanding loan balance, the heirs are not responsible for paying the difference.
Another option is for the heirs to refinance the reverse mortgage into a traditional mortgage. This can be a good option if the heirs want to keep the home and are able to qualify for a traditional mortgage. By refinancing, the heirs can repay the reverse mortgage and take over ownership of the home.
Finally, the heirs can choose to simply walk away from the home and allow the lender to foreclose. While this may not be the best option from a financial standpoint, it can be a good option if the home is in disrepair or is located in an undesirable area.
It's important for heirs to understand their options when it comes to repaying a reverse mortgage. By working with a reputable lender and understanding the terms and conditions of the loan, homeowners and their heirs can make informed decisions about whether a reverse mortgage is the right choice for them.
领英推荐
?
Camille Patterson
Loan Officer | NMLS #1517035
3655 Nobel Drive Suite 250
San Diego , CA 92122
O: 619.483.4017
Company NMLS #3274 | Equal Housing Opportunity