Too many times the argument has come up that the bank owns your home after you do a reverse mortgage. Is it true?
The fact is, there is virtually nothing different about a reverse mortgage than any other mortgage when it comes to ownership. The bank uses your home for collateral the same way for either style loan. You still own the home, and you have all the rights associated with it. You can sell or refinance, without penalty, at any time you choose. If you desire to sell your home, the lender will need to be paid off, and any remaining equity is yours to spend how you wish.
When the confusion comes up on this topic, it is usually because someone is thinking about a life estate. When you sell your home to an investor, and they let you live there for free for the rest of your life, this is called a life estate. With a reverse mortgage, you own the home and borrow against it. Don't confuse the two programs because they are not related at all.
By the way, the State does not take your home just because you did a reverse mortgage either. As long as you pay your property taxes, they will leave you alone. In case you didn't know, Oregon allows seniors to defer their property taxes. This could save you hundreds a month in outgo, postponing it indefinitely. Wait until after you do the reverse mortgage to apply though, otherwise you will have to reapply after the loan is complete.
In summary, you own your home. There is never a time that a reverse mortgage requires you to give up the home. You have the right to sell your home, keep any remaining equity, and do with it as you please.
In the event of your passing, the same rules apply to your heirs. They will inherit the home along with the mortgage and remaining equity. If they choose to keep it, they will need to refinance it or pay it off. If they decide to sell the home, they will keep any remaining equity after the loan is paid back and any fees associated with the property.
Prior to committing to any reverse mortgage programs, make sure you have all the facts. Visit our website for more reverse mortgage information. Use our reverse mortgage calculator to see how much money is available to you.
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