Reason 2: With a Reverse Mortgage There is No Risk of “Losing the House”
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Part of the reason closing costs seem high for reverse mortgages is that you are paying for government mortgage insurance - insurance that guarantees no matter how long you live or how much the reverse mortgage loan balance increases due to rising interest rates or other factors, you will never owe more than the value of your home. The reverse mortgage is unique in that it has no set date for repayment - the loan is due and payable only when the homeowner sells or dies.
Simply put: you can not outlive a reverse mortgage nor can you be forced to sell your home to pay off a reverse mortgage.
With a standard mortgage or home equity loan (including HELOC), you have specific requirements to make monthly loan payments and a specific due date when you must pay back the entire loan balance. Failure to meet these requirements will cause the lender to take action to protect their interest, up to and including foreclosure proceedings.
Article Series - Reasons
- Reasons Why a HELOC Isn’t the Answer to High Reverse Mortgage Costs
- Reason 1: HELOC’s Require a Monthly Payment; Reverse Mortgages Don’t
- Reason 2: With a Reverse Mortgage There is No Risk of “Losing the House”
- Reason 3: You Don’t Need Income to Qualify fo a Reverse Mortgage
- When a HELOC is the Better Choice
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