How do I repay a HECM reverse mortgage? Are there conditions for immediate repayment of a HECM if I am still alive? Will my estate suffer from a HECM?
A Home Equity Conversion Mortgage (HECM) is due and payable upon your death. At this time the lender will post your home for sale and repay your loan from the proceeds of that sale. If the sale of the home does not cover the amount of money due the FHA will pay the lender the remaining balance from your FHA insurance policy. A HECM is a federally insured reverse mortgage program. A person applying for a reverse mortgage using this program is in fact purchasing an insurance policy that guarantees their debt is covered in the event of their death.
Are there conditions for immediate repayment of a HECM if I am still alive?
Currently there are a few conditions that may cause immediate repayment of a HECM loan prior to the borrower’s death. If you owe any federal money (taxes) you may lose your HECM privileges. If you fail to carry hazard insurance on your home throughout the term of the reverse mortgage you will be required to repay immediately. If you do not live in the home continually as your main residence you could lose the loan. Extended stays in a nursing home for over 12 months will negate the loan and if you let the property fall into disrepair you could lose the reverse mortgage.
Will my estate suffer from a HECM?
Your estate will not suffer from a federally insured HECM. This type of insurance guarantees the lenders that if the sale of the home does not cover the amount of money owed they will receive the balance from the FHA insurance policy. Uninsured reverse mortgages will turn to the estate to recover any outstanding balances after the sale of the property.
Related posts: