Inheriting A Property With A Reverse Mortgage – Guest Post
While a reverse mortgage can be very beneficial to seniors – in that the bank pays the homeowner every month instead of the homeowner making monthly mortgage payments to the bank – a reverse mortgage is a loan on home equity and will need to be paid back eventually.
There are different events which could trigger payback of the loan. Therefore, it is important that reverser mortgage borrowers, their spouses, and their heirs are aware of these situations, so they are not taken off guard should the loan suddenly be called in.
According to a Forbes.com article, the following are some of the scenarios that could trigger a reverse mortgage loan payback:
• Death of the borrower – before heirs are allowed to take possession of the home, all fees and interest related to the principal loan must be paid when the borrow dies. In some cases, heirs may be saddled with owing more than the value of the home. Depending on the loan terms, the lender may be able to begin foreclosure proceedings thirty days after the borrower’s death.
• The borrower is unable to maintain his/her property – the lender will call the loan if the borrower fails to pay property insurance or taxes. Another reason a lender will call the loan is if the owner will not or cannot fix their property if it’s in bad shape. Failure to maintain their property, regardless of the reasons, can result in foreclosure proceedings.
• The borrower moves to assisted living facility – the loan will need to be paid back if the borrower has not lived in their home for over a year, due to a physical or mental illness that has required them to live in an assisted living facility.
It is important that borrowers and heirs understand all of the benefits and consequences that can result from a reverse mortgage loan. It is also important to remember that there are other mortgage options available, and that all options should be carefully analyzed to ensure the best solution is found. Consult with a lender who specializes in reverse mortgages to learn more about this loan program and its various intricacies.
Craig Reynolds is a seasoned entrepreneur and mortgage industry veteran with over 15 years experience in managing and loan consulting. Prided in establishing successful Mortgage Consulting teams that create and foster long-term relationships with clients.