Reverse mortgage loans should be paid back when you move out of the house or when you die. But, the loan may have to paid earlier in case the house isn’t your primary home, you are not paying your homeowners insurance or property taxes, or you’ve failed to keep the house in good repair.
The majority of reverse mortgage loans are the HECMs or the Home Equity Conversion Mortgages. An HECM should be repaid once the Eligible Non-Borrowing Spouse or the last surviving owner dies, sells the house, or is no longer using the house as their main home. This includes downsizing, moving closer to family, or transferring into a nursing facility.
When Do You Need To Pay Your Reverse Mortgage?
Eligible Non-Borrowing Spouse
This refers to your spouse who is not a co-borrower but still eligible under the rules set by the U.S. Department of Housing and Urban Development to stay in your home after your passing.
What if die or move out from your home?
If you die or move out of the house, reverse mortgage loans need to be repaid. In case your spouse or the person living with you is a coborrower on the reverse mortgage, then he or she can stay in the house and continue getting the loan disbursements as long as they continue to fulfill the ongoing obligations of the reverse mortgage loans.
But if your spouse or the person living with you is not a coborrower, he or she may have to move after you die or transfer to a nursing home.
What if you sell your home?
In case you have decided to sell your house, your reverse mortgage loan needs to be paid back plus fees and interest. In case the loan balance is less than the selling price of your house, then you will keep the difference. In case your loan balance is more than the selling price, all the proceeds of the sale will go to the lender and the remaining loan balance will be covered by the mortgage insurance.
In case your reverse mortgage Myrtle Beach is in default, and you got a notice that the loan is already due and payable, then you can sell your house for 95% of the home’s appraised value. The cash from the sale will then go to the loan’s outstanding balance and any remaining amount will be paid for the mortgage insurance.
What if you die?
Your reverse mortgage loan needs to be paid back if you die. However, this will depend on a few factors like if you have a coborrower on your reverse mortgage loan, when you got the loan, and if you were married during the signing of the loan documents and remained married until the time of your death.
One important thing that you have to know is that if the reverse mortgage case number was assigned after August 4, 2014, the loan’s due and payable status could be deferred.
Call Reverse Mortgage Specialist if you want to know more about reverse mortgage loans.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577