When the Reverse Mortgage Ends
The reverse mortgage loan will end if one of the following things occurs:
1. When the homeowner dies
2. When the homeowner sells the house
3. depending on the loan conditions
4. When the homeowner moves out of the house for 12 consecutive months
Here is some information related to the end of the loan:
1. The example for option number four can be go into an assisted living home or due to physical or mental illness the borrower is not able to live in the property on which the loan has been taken.
2. If this is happening then the reverse mortgage can be paid off with the proceeds of the sale of the house.
3. If the homeowner has died, the property can be refinanced by the heirs of the homeowner’s estate with a regular mortgage.
4. If the proceeds exceed the loan amount including compounded interest and fees, the owner of the house receives the difference. If the owner has died, the heirs receive the difference. For cases where the proceeds are not sufficient to pay off the loan, then the bank absorbs the difference.
5. In most cases when the borrower moves out of the property or dies, as long as the borrower (or his estate) provides proof to the lender that he/she is attempting to sell the home or obtain financing to pay off the outstanding debt, the investor will allow him up to one year to do so. After the one year extension period is up, the lender cannot provide any further extension of time to the borrower (or estate).
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