Biggest Fears of Reverse Mortgages
Biggest Fears of Reverse Mortgages:
What are Reverse mortgage borrowers’ biggest fears? The bank will take my home! What if the mortgage exceeds the property value, will my heirs have to pay the difference?” Do my heirs still get an inheritance? These are valid concerns, so let’s discuss. With a reverse mortgage, there’s no need to worry about mortgage defaults due to nonpayment because the bank is paying you. However, the conditions of the mortgage require you to remain in the home as your primary residence. So, the bank could file for foreclosure if you permanently move out of the property without intention to notify the bank or to pay off the loan. Like all mortgages, you must keep up with your insurance, real estate taxes, and HOA dues. Failure to meet these obligations may trigger foreclosure, for failure to maintain your insurance, nonpayment of your real estate taxes, or HOA, so stay current on these expenses.” When you permanently move out of the home, your property can be sold at market value, regardless of the outstanding loan amount. So, your heirs are protected. If the home is worth more than the outstanding mortgage at sale, then the equity goes to you or your heirs just like any other kind of mortgage.