When Does My Reverse Mortgage Come Due?
Unlike traditional equity mortgages that are due when the term of the loan ends, your Reverse Mortgage will not become due, nor will you make any mortgage payments, until you permanently move out of the home.
Your Reverse Mortgage loan becomes due and must be paid in full when one of following conditions occurs:
- the last surviving borrower passes away or sells the home;
- all borrowers permanently move out of the home;
- the last surviving borrower fails to live in the home for 12 consecutive months;
- you fail to pay property taxes or insurance and do not correct the problem;
- you let the property deteriorate, beyond what is considered reasonable wear and tear, and do not correct the problems.
When any of the above conditions occur, you can sell the property just as you normally would. You keep the net proceeds after the mortgage is paid.
If your home is passed to your heirs, the Reverse Mortgage comes due. Your heirs may either pay the balance due and keep the home, or sell the home and use the proceeds to pay off the loan. They get to keep the net proceeds from the sale just like any other sale.
As long as your heirs show they are trying to sell the property, they will be given months to sell the home. During this period of time, the loan balance will continue to grow even though you are no longer receiving payments, as the interest on the balance continues to be added until the loan balance is paid.
If somehow your balance is more than the value of the property, your heirs only have to pay up to the value of the home. Reverse Mortgages are non-recourse loans as a protection measure for both you and your heirs.
With traditional mortgages you or your heirs owe the balance regardless of the value of your home. With a Reverse Mortgage you and your heirs are never responsible for more than the value of the home no matter how much you owe.
Mortgage Trust Group, Inc.
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