One of the most popular questions when it comes to reverse mortgages is what happens with the loan and the home after the borrower’s
death.
Reverse mortgages are meant to be the final loan that senior loan borrowers will make and that is why this question is always on top of the minds
of many homeowners as well as their heirs since many of them want to keep the
loan and their house for the rest of their lives.
In case they get approved for a reverse mortgage loan, they
will be able to live in their houses without having to pay mortgage for life.
The majority of the borrowers know that the eligible
principal limit or the benefit amount will depend on the youngest borrower’s
age along with the HUD lending limits, home value, as well as the interest
rates implemented during that time.
Those who did their research and are aware of this fact are
worried about the changes that may happen on their loan once one borrower,
whether younger or older, dies first. They’d like to know if the remaining
spouse could stay in the house, if there will be any changes to the reverse
mortgage loan, and what will be the effect on their heirs.
As a matter of fact, all borrowers who have heirs are almost
always worried about what will happen to their mortgage and their homes once
they pass away.
You should know that the terms do not change when the loan
closes. The original terms remain if one of the loan borrowers has to leave the
house or if one dies before the other one, regardless of the age of the
borrower who’s remained.
Reverse Mortgage Vs. Traditional Loans
Reverse mortgage, as its name implies, is the reverse of a
traditional mortgage. In the latter, the borrower makes monthly payments to the
lender until the loan amount plus interest is settled. In a reverse mortgage,
the lender pays the borrower the amount of the loan. The loan, interest and
other charges accrue and will be due once the last borrower leaves the house
permanently.
Although no repayment is due on a reverse mortgage, there’s
no prepayment penalty and that means borrowers could opt to make payment in
their preferred amount at any time without worrying about the penalty. But the
borrower is not required to do such a thing until they permanently move out of
the house or if they decide to sell their home.
However, borrowers must remember that they still need to pay
the insurance and taxes of the house as well as the regular upkeep of their
home. The requirements are the same as with a forward or traditional mortgage.
If you don’t pay them, it will be considered as default under the loan’s terms.
What About The Interest?
There is a principal limit or maximum loan amount on every
reverse mortgage loan. When it comes to how you receive the money and how fast
the interest accrues will be up to you. More interest would accrue on the loan
if you borrow more money and you borrow it earlier in the loan.
For instance, if you get a reverse mortgage loan under the
line of credit option or payment option but you only draw a little every now
and then, then the interest on your loan would not accrue as fast as those
borrowers who take a lump sum on the whole amount.
This will make sure that the least amount of interest would
accumulate and the balance is going to be the lowest possible once you pay back
the loan. If you just want to settle an existing mortgage loan so you can stay
in your house, if you don’t have any heir, then you can use the proceeds of the
loan to may you live comfortably during your retirement years.
Call Reverse Mortgage Specialist now and learn more about the benefits of taking out a reverse mortgage.
David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/
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