You can never be forced from your home or required to sell your home if you have an FHA insured HECM reverse mortgage loan. A question that comes up frequently from folks that are considering a reverse mortgage is:
"If I live long enough to use up all the equity in my home, will I be forced to sell my home and pay off the reverse mortgage lender?"
The answer to this question is an unequivocal "NO."
As long as you continue living in your home as your primary residence, keep it properly maintained and pay your real estate taxes, you will never be forced from you home. If you live so long that all your equity has been paid out to you, or if your property value drops after the loan is in place, it is not your problem.
HECM reverse mortgages are non-recourse loans, which means that the house stands alone for the debt. When you take out a HECM reverse mortgage, one of the closing costs is the FHA insurance premium. The insurance fund is used to pay the difference to the lender, in the event of a shortfall at the time that you do leave your home permanently or sell. You or your estate are NEVER responsible for any shortfall at the end of the loan term.
HECM Reverse Mortgages Become Due:
* When the last borrower passes away.
* The borrower sells the home.
* The last borrower leaves the home for 12 consecutive months.
* The home is not properly maintained.
* Real estate taxes or property insurance are not paid.
A couple of the most attractive attributes of a HECM reverse mortgage loan is the guarantee of a payment free mortgage for as long as you live in your home.
If you elect the tenure income stream, you are guaranteed a fixed amount of money being paid to you on a monthly basis for as long as you live in your home. NO MATTER WHAT! This loan has the full faith and credit of HUD and FHA standing behind it.
Read more about additional safeguards for HECM reverse mortgage loans.
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Great post; I don' t think people really understand that they will continue to get monthly payments, no matter how long they live in the house...even if the initial amount has been exceeded. Also, the credit line growth continues (on whatever remaining balance is), even if that loan balance and credit line exceed the value of the house and they can still pull out the credit line amount, befoe leaving the house.
Remarkable isn't it...there are so many goodies in this loan; so much built-in safety, yet people still write about it as though it was a predatory orge.
Thanks for such a good article.
Gloria de Gaston Boone, Reverse Mortgage Specialist/Managere