How Are Reverse Mortgages Dealt With During The Probate Process?

A reverse mortgage lets eligible homeowners tap into their home equity to meet the borrowers’ retirement expenses. In order to qualify, you should be at least 62 years old, reside in the property as your main home, and own the house outright or you have enough equity in the house.

No monthly payments of interest or principal are due on the reverse mortgage loan. The loan will accrue interest as well as other fees that aren’t due until a trigger situation happens. But, the borrower remains responsible for homeowner insurance, property taxes, maintenance, as well as the homeowner association fees.

You have three options for loan proceeds to be given to the borrower. These are a monthly payment, a lump sum, and a home equity line of credit.

The reverse mortgage will become due when one of these trigger events happen:

1.    The property has been sold or the title to the property has been transferred.

2.    The borrower is no longer using the house as his principal residence for more than 12 months.

3.    The borrower has failed to meet the obligations of the reverse mortgage, like paying property taxes, keeping the property in great condition, and maintaining homeowner’s insurance.

In case a surviving spouse isn’t a borrower, perhaps because he or she is below 62 years old, a federal case, holds that the lender can’t foreclose against a surviving spouse who is a non borrower at the death of the borrower/spouse. But the loan will remain due as mentioned above.

In case a house with a reverse mortgage will become subject to probate, the loan remains an encumbrance on the house. Encumbrances remain with the house while it changes ownership, and will continue until it’s satisfied. The house won’t revert to the bank once the last borrower dies. When that happens, the reverse mortgage must be paid off however, all of the remaining equity will belong to the beneficiaries or heirs of the borrower as per the terms of the trust or will. Reverse mortgage borrowers who will remain in their houses for several years will accrue more charges and interest on the reverse mortgage and the remaining equity cost will rely on how much money the borrower has taken out from their mortgage as well as the existing market condition.

The beneficiaries and heirs of the borrower have to determine when they would like to keep the house or if they want to sell the house. In case they would like to keep the house they should pay off the balance of the loan with a new loan using refinancing or with other source of income that’s available. In case they go for selling the house, they have to get in touch with the servicer of the reverse mortgage loan right away and let them know about their decision and also keep good communication with that servicer. The beneficiaries/heirs have from between three to 12 months, with the approval of the lender, to sell out the property. The good thing is a reverse mortgage loan is considered a non-closure loan, which means that when the amount that is due on the loan, including fees and interest, is far greater than the amount that the property will sell for the beneficiaries/heirs aren’t liable for any extra amount owed. A sale to an eligible third party and non related group doesn’t have any limitations. But the beneficiaries/heirs can’t sell the house to a family member for an amount that’s less than the cost of the loan.

Call Reverse Mortgage Specialist if you wish to know more about reverse mortgage loans.

 

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

A Second Look at Reverse Mortgage Amid Coronavirus Pandemic

Reverse mortgage has gained the attention of many these days as a potential source of financial stability as the stock market plunge and the 401(k)s shrink away amid the coronavirus outbreak.

A part of the new appeal in this type of loan has been the rising equity that seniors have in their homes. The NRMLA or National Reverse MortgageLenders Association said that homeowners who are at least 62 years old aw their housing riches increase by $39 billion for the 3^rd quarter to the 4^th quarter of 2019, which set a record level of a whopping $7.23 trillion at by the end of the said year.

The growth is significant and it marked a 67% year to year increase for the sector. The customers of reverse mortgage loans is the older homeowner that’s in their retirement, and their retirement just battered by as much as 30%. Many borrowers asked if they should be accessing the equity in their homes rather than sell off their position or just live off their retirement with the belief that over time, it will return.

Although economic crises aren’t something new, the current situation’s scope and depth on the global scale is affecting the people hard, with several potential borrowers asking more questions about reverse mortgage loans.

Meanwhile, reverse mortgage borrower interest has risen continuously at an extremely high level and perhaps even higher since borrowers are noticing some of their other retirement assets undergo significant issues because of the decrease in the stock market. Borrowers are making use of their home equity as a source of income that they could tap into in order to fill that financial gap that is being created by the coronavirus pandemic. From the perspective of a borrower, it’s most likely because there is a growing interest at the borrower level.

Many of the borrowers of reverse mortgage loans are in the eye of this particular hurricane. They are worried about their financial health and if they still have the ability to age in place in the years to come. The deeper answer to this question is what are the actions they’re taking to edge their risks during this time when the markets are making vast movements? A lot of them are turning to reverse mortgage for safety and security.

Inquiry levels about this loan has reached new levels that lenders haven’t seen in three years. This could be attributed to a wider trend where more homeowners are considering their home equity as an option to help them get a more secure and safe retirement outcome.

An essential component in this rising consumer interest is overcoming the confusion by a lot of people about how this product work. Even though reverse mortgages have been available on the market for several years, many people are still unaware of how the loan works.

There remains a lot of misconceptions regarding the product. If you wish to know more about reverse mortgages, don’t hesitate to call Reverse Mortgage Specialist.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Is Reverse Mortgage Safe?

As you start or approach retirement, many people find that they may need more income. There are many ways to increase your cash inflows like a dividend paying stock or a part time job. But there’s another option that you may want to consider – reverse mortgage. What is a reverse mortgage and is it safe?

Understanding Reverse Mortgage

Getting a reverse mortgage loan is just like selling your house to a lender in return for money. It may be in the form of an income stream, line of credit, or a lump sum. You will be allowed to stay in your house for as long as you can. It is still a loan and you will borrow an amount that is less than the value of your home. The amount that you owe will increase as time passes by as interest rates are applied.

You don’t have to repay the loan until you die, stop living in the house, decide to sell your home, or move to a nursing home. During that time, your house could be sold to cover your debt. Your heirs may keep the house provided that they repay the loan.

What Is So Good About A Reverse Mortgage?

The big plus of a reverse mortgage Columbia is that it can provide you with an income stream that could be very welcome once you retire. With countless Americans underprepared for retirement in terms of their finances, getting a loan could be helpful.

A reverse mortgage tend to be tax free and that is another benefit that borrowers will enjoy. Other retirement funding options require you to downsize and sell your house or even to move to a much less expensive region, reverse mortgages will allow you to stay in your house while you receive regular payments.

Is A Reverse Mortgage Safe?

Reverse mortgage is an effective and safe way to increase your retirement income. But it also has its own set of disadvantages.

You may be sold one with terms that are less ideal by a pushy sales person. Do not fall for their hard sale pitches. In case you are interested in a reverse mortgage, it is better if you get in touch with solid lenders on your own and maybe have an attorney or reverse mortgage specialist to help you out before you sign any contract.

You might not get as much income through a reverse mortgage as you may have expected. The amount of money that you can borrow would depend on certain factors like your life expectancy and that of your spouse, as well as the home value, home equity, and the current interest rates. As time goes by, interest rates will be added to your loan balance and you also have to deal with closing costs, just like other types of loan.

A reverse mortgage loan may not be the financial option that you thought it was since you will still be held accountable for paying off home related expenses like home insurance, property taxes, home maintenance, and home repairs.

Call Reverse Mortgage Specialist if you wish to know if a reverse mortgage is the best option for you.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Can A Reverse Mortgage Lead To Foreclosure?

Many people who are interested in getting a reverse mortgage are wondering if this type of loan could lead to a foreclosure. The answer is yes. But there’s one important thing that you need to know. The circumstances that would cause a reverse mortgage foreclosure are different from the situations leading to a conventional mortgage foreclosure. If homeowners hear about foreclosure, they immediately think about failing to make the needed monthly payment for the mortgage. Well, this doesn’t really apply to a reverse mortgage loan since it does not carry any monthly repayment obligation.

It’s no wonder many people and even the media get a lot of things wrong about reverse mortgage foreclosures. It’s crucial to note remember that a foreclosure could be the resolution of a reverse mortgage loan once the borrower dies. In case the balance that’s due goes beyond the value of the loan, or if the late borrower has no next of kin to take care of the sale, the estate would just let the home go into a foreclosure.

Factors Leading To Reverse Mortgage Foreclosure

Why Foreclosures Happen?

Although reverse mortgages do not need a monthly principal as well as interest mortgage payment during the loan’s duration, there are other obligations that the borrower need to fulfill like maintaining the home and paying all property related costs. Ignoring these costs would lead to loan maturity. If that happens, the loan borrower or the heirs would end up selling the house to pay off the balance on the loan. In case there’s no action to sell the house, the lender would have to foreclose on the house and deal with the sale on their own so that the loan could be repaid.

No Equity Remains At Reverse Mortgage Loan Maturity

The loan balance in some cases goes beyond the reasonable sales price of the house if the loan matures. In this situations, they don’t have any economic incentive to sell of the house on their own. Fortunately, reverse mortgage loans are considered non recourse loans and provide them the chance to just walk away even with a loan deficiency. This should not affect their credit profile. However, the HUD is given the title to the house through foreclosure, allowing them to sell the house and pay off at least a part of the balance of the loan.

A Property Tax Default Happens

Not being able to pay the property taxes will almost always lead to foreclosure. This holds true if the homeowner has a conventional mortgage, reverse mortgage, or not mortgage at all. Unfortunately for the lender, they’re the primary lien-holder on the house and are mandated by federal rules to foreclose on the house for most reverse mortgages loan. In 2015, the HUD created a mandatory financial assessment of each borrower that has significantly decreased the number of property charge defaults.

Always remember that a reverse mortgage Greenville lets the homeowner gets access to funds that would in theory, lower the likelihood that a borrower would default on their payment obligations. However, with the rising financial pressures of going into retirement, people can’t always expect a perfect outcome.

Call Reverse Mortgage Specialist if you want to know more about this loan and if you need professional help in deciding whether this is the best option for your retirement plan.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/