Do you have parents, grandparents or yourself are over the age of 62? You have probably heard of reverse mortgages and may even have one, but do you know what happens to the loan once you pass? Do you your heirs or trustees know what their options are?
Let's explore the truths and myths. A reverse mortgage is just that; it is a loan made against the current market value of your home, length of time depends on factors such as your age, health and other statistics, but typically for much longer than life expectancy, with interest accruing from the start but it is not repaid until the home is sold. Here is where it's important to know and share, with loved ones, about their options if they inherit or are the trustee or executrix, of your estate.
The loans are under HUD guidelines and regulations and most if not ALL, are insured through the FHA. Loan servicer's will send out a letter within 30 days, advising you of your rights, which include 1)family members have the right to buy the property at 95% of current market value, regardless of the balance owed, through financing or other sources of funds, and are given 2-12 months to complete transaction. 2) Deed in Lieu of which is basically handing over to the bank the keys and walking away. 3) which is a terrific option, you can short sale the property for current market value and the FHA insurance PAYS OFF THE BALANCE OWED! Not the family members!,The lender will do an appraisal to determine ,upon an accepted offer and decide to accept or counter, back. Make sure , however, they are not silently fast tracking it to foreclosure ( it happens some times).
Whatever option you choose, please seek out professional advice for any concerns you may have. And choose a Realtor that understands the process and helps make this as smooth a process as possible.