What Happens If I Pay Off My Reverse Mortgage Early?

Borrowers may pay off a reverse mortgage any time without prepayment penalties. Interest charges may continue accruing for a month in some situations.

The ability to pay off a reverse mortgage early is a valuable option that must be considered carefully. The mechanics of early pay off are simple while the ramifications have a significant affect on future credit availability.

How Reverse Mortgage Early Payments Affect Loans

Paying off a reverse mortgage early should not trigger prepayment penalties. In most situations, the process remains simple. Call a lender and request a payoff statement. The statement will include all outstanding principal and current interest charges. In addition, if payment is not made several days before the next interest period begins, a lender may include an additional month’s worth of interest. To avoid additional interest, call a lender and discuss the interest calculation period. By paying a loan a week earlier, an additional month of interest may be avoided.

Borrower Privileges

Choosing to payoff a reverse mortgage is a big step for all borrowers. The payoff will stop all future interest charges. In addition, after pay off, the line of credit established by the loan is no longer available. Each person who considers foregoing future credit privileges should carefully weigh available alternatives. Of course, homeowners may chose to apply again if necessary and beginning the process again. Refinancing mortgages for a lower rate may be advantageous, but be sure to compare all costs in advance. Refinancing may require new costs and fees for each necessary step in the qualification process.

Considerations

Real estate market fluctuations may affect the amount of home equity available in future reverse mortgages. Before paying off a loan, be sure to verify the current value of a home. In difficult economic climates, future approvals may become increasing difficult if home values drop unexpectedly.

Related posts:

1. How Can I Payoff My Reverse Mortgage Early?
2. How Does Reverse Mortgage Early Repayment Affect The Loan?
3. Are There Early Repayment Penalties On a Reverse Mortgage?
4. Can I End My Reverse Mortgage Early?
5. Are There Early Repayment Penalties On a Reverse Mortgage?

This entry was posted on Sunday, December 20th, 2009 at 9:20 pm and is filed under reverse mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.