What happens to the reverse mortgage after the borrower's death? This is one of the most common questions when it comes to this type of
loan.
What happens after death?
When the last surviving borrower of the reverse mortgage has
passed, the loan balance will become due and payable. A lot of people think
that the house will revert back to the bank once the last borrower dies but
that is not what happens.
Your heir will have the option to choose if they would like
to repay the balance of the loan or keep the house, sell it and keep its equity
or just walk away and leave the house to the lender and let them take care of
disposing the property.
In case they decide to keep the house, they should repay the
loan, which means they need to refinance it with a new loan or use other means
they have available.
They could also settle the loan at a lesser amount or about
95 percent of the existing market value. If they would rather sell the
property, they have to make sure that they do whatever needs to be done to
change the title so they could put the house into the market. If this is the
case, it is better if the borrowers talk to an estate attorney first to make
sure that they are taking the needed measures for their unique situation.
Will Your Heirs Be Held Responsible For The Balance Of Your Reverse Mortgage?
The heirs who will get the house will have to repay the
outstanding balance of the reverse mortgage. They can do this by selling the
house within 12 months or by refinancing it into a conventional loan. The heirs
can keep the remaining equity in the house.
Is It Possible To Lose Your House With Reverse Mortgages?
You may default on this type of loan if you break at least
one of the three rules on loan maturity that were outlined in your agreement.
If you want to keep your loan in good standing, you have to pay your homeowner’s
insurance and property taxes regularly. Plus, you also need to use the house as
your primary residence. If you fail to meet any of these requirements, the
lender will have the right, as per the HUD, to call the reverse mortgage due.
Is It Possible To Buy The House Back?
Because the house is already your own then there’s no point
to buying it back. You need to understand that reverse mortgage Greenville is just a loan
against your home. There’s no prepayment penalty. Plus, you could also repay
your loan in any amount you prefer, voluntarily.
Is It Possible To Walk Away From Reverse Mortgages?
In case the balance on your outstanding loan is more than
the current value of the property, you could no longer stay in your house. You
can walk away or create a deed in lieu of a foreclosure. Reverse mortgage loans
are known as non-recourse loans, which means you cannot transfer your debt to
your heirs or estate.
Call Reverse Mortgage Specialist if you want to know more about reverse mortgage, the requirements, your obligations, and how to apply.
David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/
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