Question:

When does a reverse mortgage loan need to be repaid and how much is owed?

Answer:

It is of great use to seniors to know when the principal and interest with a reverse mortgage loan are due. Actually one can outlive the loan and never owe more than the amount originally borrowed, but even though the senior remains in title of the property, while receiving payments are from the lender, one should be familiar how and when a reverse mortgage loan becomes due, even though no foreclosure can be attempted on the property.

The reverse mortgage loan becomes due when:

  • the last surviving borrower moves out, sells the house, or passes away
  • all borrowers leave the house permanently
  • the last surviving borrower fails to live in the house for twelve successive months (for example, due to illness)
  • property taxes and insurance are not paid
  • property is not maintained properly and begins showing signs of unreasonably deteriorating condition and the owner does not fix problem areas in a timely manner

When the reverse mortgage loan finally becomes due, principal, interest and fees are all covered from the sale of the real estate and accompanying assets. The remaining equity, if any, is handed down to the borrower(s) or their heirs. No debt should be passed on to the estate or the heirs.

Our advice: Be sure to ask your lender about FHA loans. FHA loans have very competitive interest rates because the loans are insured by the US Federal Government. Even if you have had serious credit problems, such as bankruptcy, it is easier to qualify for an FHA loan than a conventional loan. Also, taking an FIXED rate loan while the interest rates are still low is a smart idea. Check your eligibility here:

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Common misspellings: mortage and morgage