When I Pass Away, What Happens to My Home and Equity With a Rever
One of the biggest questions I get from my prospective reverse mortgage customers centers around what happens to the home and more importantly the homes equity after death.
A reverse mortgage lender loans money, typically anywhere from 50% to 75% of homes value, to the borrower. The borrower uses that money as he or she sees fit.
Reverse mortgage companies make profit on the interest accrued on those moneys loaned to the senior. The contract is the bank is repaid the loan plus interest upon the sale of the property. Many times this is after the death of the borrower.
Reverse mortgage companies are very careful about how much money they lend in relation to the value of the home. This is why age plays such an important role in this calculation.
Based upon the calculation their bets are relatively covered and the vast majority of borrowers will have equity at their passing or when the home is sold, whichever comes sooner.
In the circumstance the borrower passes away the home is willed to the estate. The bank gives the estate about twelve months to get the home sold.
Lenders are in the interest business. They are not in the foreclosure business. While the home is being marketed for sale they are still making money. Therefore, if it is being marketed at a fair price by a professional realtor, extensions are normally granted.
It will eventually sell. When the home sells the bank is repaid the original principal amount loaned plus accumulated interest over the years. That is all the bank is entitled to receive.
Reverse mortgage folklore explains how the mortgage company gets all of this equity. Dirty, filthy banks praying upon seniors. On the contrary, the estate gets it.
Every so often more will be owed than the home is actually worth. In this event the heirs are in a safe zone.
All FHA insured reverse mortgages have a non-recourse clause. This means, in the event described above, the mortgage company can't come back on the borrower or the estate for the deficiency.
These mortgages are pretty safe bets for the borrower and the borrowers heirs.
A reverse mortgage lender loans money, typically anywhere from 50% to 75% of homes value, to the borrower. The borrower uses that money as he or she sees fit.
Reverse mortgage companies make profit on the interest accrued on those moneys loaned to the senior. The contract is the bank is repaid the loan plus interest upon the sale of the property. Many times this is after the death of the borrower.
Reverse mortgage companies are very careful about how much money they lend in relation to the value of the home. This is why age plays such an important role in this calculation.
Based upon the calculation their bets are relatively covered and the vast majority of borrowers will have equity at their passing or when the home is sold, whichever comes sooner.
In the circumstance the borrower passes away the home is willed to the estate. The bank gives the estate about twelve months to get the home sold.
Lenders are in the interest business. They are not in the foreclosure business. While the home is being marketed for sale they are still making money. Therefore, if it is being marketed at a fair price by a professional realtor, extensions are normally granted.
It will eventually sell. When the home sells the bank is repaid the original principal amount loaned plus accumulated interest over the years. That is all the bank is entitled to receive.
Reverse mortgage folklore explains how the mortgage company gets all of this equity. Dirty, filthy banks praying upon seniors. On the contrary, the estate gets it.
Every so often more will be owed than the home is actually worth. In this event the heirs are in a safe zone.
All FHA insured reverse mortgages have a non-recourse clause. This means, in the event described above, the mortgage company can't come back on the borrower or the estate for the deficiency.
These mortgages are pretty safe bets for the borrower and the borrowers heirs.
About the Author:
A multi-page California Reverse Mortgage booklet can be obtained by click this link. Also, if you want further explanation on anything contained in this article, get the answers by following this link to the Educational site for the California Reverse Mortgage.
posted by Debt Consolidation Loan at
8:36 AM
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