The very nature of a reverse mortgage can be confusing. With a reverse mortgage lenders pay you either in monthly installments, with one lump sum, a line of credit or as a combination of a line of credit and monthly installments. The following lists provide information regarding repayment of a reverse mortgage.
A reverse mortgage comes due when under the following conditions:
- Death of the homeowner
- Upon sale of the home by the homeowner
- If the homeowner lives elsewhere for 12 consecutive months (i.e. assisted living home)
- Upon any instance of default.
When the reverse mortgage becomes due there are two options for paying it off.
- Proceeds from the sale of the home. The borrower or their heirs could allow the home to go into foreclosure to repay the loan as well.
- The heirs of the homeowner can refinance the loan
Like all loans a reverse mortgage does carry conditions in order to remain valid. Below is a list of a few reasons for which a borrower would find themselves in default.
- Failure to pay property taxes
- Failure to keep the home in good repair
- Failure to insure the home
- Taking of new debt on the home
- Bankruptcy
- Abandonment or donation of the home
- Eminent domain
To apply for your reverse mortgage click here.
These materials are not from HUD of FHA or not approved by HUD or a government agency (HUD Mortgagee Letter 2014-10)