A reverse mortgage is a home equity loan without a payment. You do not repay the loan as long as the home remains your principal residence. Your income and credit rating is not considered when qualifying for the loan. The writer is a reverse mortgage expert.
How much money can be borrowed? The reverse mortgage loan amount is based on the home value, the number and age of the homeowner(s), and the current interest rate. The maximum allowable home value varies depending on the program selected. The FHA program has limits depending upon county.
Will my heirs owe anything if I die? You, or your heirs, will never owe more than your property is worth. Upon your death, the loan balance consisting of principal paid to you or on your behalf, plus any accrued interest, becomes due and payable. Your estate/heirs may choose to repay the loan by selling the property or they may want to pay it off by other means so they can keep the home. If the loan should exceed the value of your property, your estate will owe no more than the value of the property; the mortgage insurance will cover any balance due to the lender. No additional financial claims may be made against your heirs or estate.
Can I be forced to sell if property values decline? As long as you continue to occupy the property as your principal residence, you cannot be forced to sell or vacate the property. That’s still true even if the total amount you owe on this loan exceeds the value of the property or if the fixed term over which you received monthly payments has expired. No deficiency judgment may result from your loan. Mortgage insurance covers any further obligation to the lender.
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