Are you afraid of what will happen to your property if your reverse mortgage loan balance becomes bigger than your home’s value? That is a possibility, especially with the unpredictability of the economy. And this scenario might cause you to worry about how our heirs will be burdened by the responsibility of paying for the difference.
The good news is that you don’t have to worry about your heirs scrambling for money to repay your Home Equity Conversion Mortgage (HECM) if your mortgage balance becomes bigger than your home value when you pass. If this happens, your mortgage insurance will be taking care of the remaining balance.
If you are thinking of selling your home while you still have your reverse mortgage, remember that you need to pay back the amount you borrowed, including the fees and interests of your loan. The good news is that if your loan balance is lesser than your asking price for your home, you get to keep the difference.
Be aware that if you default on your reverse mortgage and receive a “due and payable” notice, you may need to sell your property for at least 95% of the appraised value to pay off the outstanding loan balance. If there is any balance left, the mortgage insurance will take care of it as well.
If, for any reason, you need to transfer to a nursing home or live with a family member in another home for more than 12 months, you will have to pay your mortgage in full. This is if you are the only loan borrower. But, if your spouse is your co-borrower, then he or she will not be evicted and can continue staying in your home provided that the loan obligations are paid regularly.
How we can help you when it comes to reverse mortgages? If you want to know more, do not hesitate to contact us.