Repaying The Reverse Mortgage (HECM)

So, you’re considering a reverse mortgage. It is always wise to fully understand the main elements of the “HECM” loan.  In making your financial decision, you have learned about the requirements to obtain a reverse mortgage.  You may also have looked into some financial alternatives.  Well, you have decided that the reverse mortgage fits your present and future financial needs.  However, there will come a time when your situation changes and your loan will need to be repaid.  Some examples of when a “HECM” loan is to be repaid are as follows:  1. You sell your home.  2. You vacate the home for more than 12 months. This is the case in most states.  3.  You pass away and there is no other borrower on title.  4.  You do not keep up on your taxes and homeowners insurance.  5.  You do not maintain the home to FHA standards.

Take for example, the last borrower on title passes away after living in the home, as their residence, until his or her death.  The estate would sell the home and pay off the “HECM” loan with the funds from the sale and keep any equity remaining.  You nor your heirs will ever owe more than the home brings at market.  Heirs can elect to pay off the mortgage and retain ownership of the home.

Another example would be when the borrower decides to either downsize or maybe move closer to friends and family.  All the bower has to do is put the home on the market for sale.  After selling the home, the reverse mortgage balance is paid off from the proceeds of the sale and any money left over is the borrower’s to do with as he or she wishes.  Remember, the borrower nor their heirs will never owe more than the home brings at market value.

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