A reverse mortgage gives older homeowners aged 62 and up the ability to convert the equity of their homes into cash as they continue to live in their own homes. When you are at this age, you may need an income that will help you with your needs, be it about your health, house repairs, necessary expenses, or even to be financially liquid to do what you want to do.
If you qualify for a reverser mortgage, you need to realize that there are costs and risks involved in this decision. There have been many reverse mortgage foreclosures because some homeowners have been facing challenging times, and others have been experiencing poor reverse mortgage servicing. This lead to senior people faced with the prospect of losing their home with nowhere to go.
HECM vs. Proprietary reverse mortgage.
To put it simply, there are two types of reverse mortgages, proprietary reverse mortgages and Home Equity Conversion Mortgage (HECM). Proprietary reverse mortgages are developed and backed by private institutions, and HECMs are federally insured mortgages. HECMs are the most common reverse mortgages in the market as it is FHA insured.
HECM foreclosure; debt demandable
So when can a HECM home be foreclosed? When the last borrower sells the home, he relocates to a permanent location or in the event of death. What does “last borrower” mean? Both spouses can share a reverse mortgage. So if one dies and is both named the borrower, the surviving spouse need not worry because there will be no eviction until both borrowers pass.
The reverse mortgage will be deemed demandable if the borrower will not keep the house in tiptop shape and if the taxes, insurance, and other property-related charges are not being met. If you wonder how much you can receive if you use your property for a reverse mortgage application, contact us for a more detailed explanation.