Will The Bank Take My Home Due to My Reverse Mortgage?
Many people, seniors and juniors alike, have a misconception that a reverse mortgage is nothing more than selling your home to the bank. There is no more truth in that than saying you own your home now, knowing that the bank holds a note on it worth 95% of the current value.
A Reverse Mortgage is a mortgage just like the 30-year fixed we all know and love. We, as homeowners, have the right to do what we like with our home, without having to consult with the bank. We are on the title, and reserve the right to pass our home down to our children, without the bank coming in and taking it from them claiming that they own it. However the bank does reserve the right to call the note, under specific circumstances.
What homeowners, and their families should be aware of is that a Reverse Mortgage starts with a borrower 62 or older, living in their primary residence. They also need to have substantial equity. The premise of the Reverse Mortgage is that the bank sets a loan amount that it is willing to lend against the property, (just like a traditional mortgage), but instead of the loan proceeds going to someone else, like a seller, on the traditional side, they go to the homeowner.
So what happens when the homeowner vacates the home? Many people are under the impression that the bank comes in a takes over. This is certainly not the case. In the event that the homeowner leaves the home, (and yes on a more permanent basis. Vacations are allowed), the lender generally gives 9 months to settle the note. This can be by selling the home, refinancing, or if available, having the not paid off. In the event that the home does not sell, nor can anyone purchase, or refinance the note, the bank will step in and sell the property. Keep in mind that most banks want to work with you. If they see that an attempt is being made to resolve the debt, then they may grant an extension. If the bank does come in and foreclose on the property, then they will become the party responsible for selling it. Any proceeds available after the sale and appropriate fees, will go back to the estate. Furthermore any heirs are not personally obligated to repay the note, thus a Reverse Mortgage allows for a degree of safety in terms of not creating an undue burden on the remaining family members.
A Few More Related Articles of Interest:
September 16th, 2011 at 5:44 pm
I am following your blog, for a long time. Because, your blog is including, useful and necessary information. Your blog is in my browser’ s bookmarks.
Good blogging, good jobs….