How is a reverse mortgage paid? Can I pay off my reverse mortgage early or must I keep receiving payments? Can my children pay off my reverse mortgage?
When you have a reverse mortgage on your home the debt must be paid upon either vacancy of the home or death of the borrower. In most cases the loan is paid by the sale of the home. At the time of the sale the lender will keep all monies owed and, if there is extra money from the sale, pay the estate any remaining balance. A reverse mortgage can be paid by the estate if the estate wishes to keep the home. Also, if the borrower sells the home prior to death the reverse mortgage will be paid from the proceeds of the sale.
Can I pay off my reverse mortgage early or must I keep receiving payments?
Most reverse mortgages will allow for an early pay off of the loan amount. There are a few that have a time clause attached to the contract. This time clause states that the borrower must keep the reverse mortgage contract for a certain length of time prior to paying it off or refinancing. This ensures that the lending institution makes a certain amount of interest income before relinquishing the loan. If you have passed this date, or do not have the time clause, you can pay off your reverse mortgage at any time and stop receiving payments.
Can my children pay off my revere mortgage?
After the borrower has left residence of the home, the heirs/children of the borrowers will be given the option to repurchase the home from the lender. At that time the children will be able to purchase the home for the amount that is owed to the lender plus any applicable interest and fees. If the heirs do not want the home the lender will sell the home on the open market and the proceeds will be used to repay the loan amount.
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