What happens at the end of a Reverse Mortgage?

By
Mortgage and Lending with Academy Mortgage.......We are a Equal Housing Lender CO NMLS2421 : NMLS 264534

What Happens at the end of a Reverse Mortgage?

Question: You explained that a Reverse Mortgage is a loan on the equity of my home, and it becomes due when I move from my home or pass away.  How does that work in the end, what happens at the end of a Reverse Mortgage?  What if there is not enough money from the sale of my home to pay back what is owed on the Reverse Mortgage?  Will my heirs have to pay the remaining balance due?

Answer: This is an excellent question.  Generally, after you move from your home, or pass away, the bank will send a notice that the loan is due. 

At that time there are choices to be made.  One option is to put the house up for sell and pay the balance of the Reverse Mortgage with the proceeds from the sale.

Another option is that if you, the borrower, have passed away, your heirs may purchase the house by taking out a traditional mortgage themselves.

Notice in both these cases the house has been sold and a traditional mortgage has been taken out on the house.  That leads us to the value of the house at the time of sale.

If the value of the house is less than what is owed on the Reverse Mortgage and the proceeds from the sale do not cover what is due on the loan, the bank endures the loss/difference.  This is because the Reverse Mortgage is an FHA loan, which is a federal program, and is non recourse; this means FHA cannot charge the borrower or the heirs if the value of the house is less than what is due on the loan at the time of the sale.

In the opposite situation, if the value of the house is more than what is owed on the Reverse Mortgage, you (if you are living) or your heirs keep the money!

I hope I have answered all of your questions.  If I can further explain more about a Reverse Mortgage, please give me a call at 541-868-1050, or email me at loansbyellenadams@gmail.com.

 

Posted by

 

_______________________

Ellen Adams with Academy Mortgage 

18 YEAR VETERAN IN THE MORTGAGE INDUSTRY

    Phone: 541-521-7192

    Cell: 541-521-7192

    Email :Ellen.adams@academymortgage.com

   Website: www.academymortgage.com/ellenadams

    NMLS: 264534 

    Stay In Touch: follow me on twitter Go to my WP website Go to my Facebook Page

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Roy Kelley 01/12/2011 04:09 AM
  2. Mary Yonkers 01/12/2011 05:15 AM
Topic:
Lending / Financial
Location:
Oregon Lane County Eugene
Groups:
Active Rain Newbies
Consumer Mortgage Tips
ActiveRain Contests
Tags:
eugene
lane county
retirement
fha
reverse mortgage
senior
oregon
non recourse

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Ambassador
895,575
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Ellen....for the right folks it's the perfect situation.  And the ending "ain't bad at all."  I love em!

Jan 12, 2011 03:51 AM #1
Rainmaker
441,552
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Thanks for this post. It is a great explanation. I am going to bookmark this page as a reference.. Thanks again.

Jan 12, 2011 03:57 AM #2
Rainmaker
5,421,597
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Good post. I will re-blog it for you.  Have a great day.

 The colors of winter in Maryland. Life is good!

Jan 12, 2011 04:05 AM #3
Rainmaker
1,219,187
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor

Ellen--Very good post that makes it easy to understand Reverse Mortgages.  I will re-blog, too.  Thanks for the notice.

Jan 12, 2011 05:12 AM #4
Rainer
37,641
Brad Hornshaw
Brad Hornshaw Realtor Lynnwood, Bothell, Everett - Lynnwood, WA
Realtor, Listing Agent, Buyers Agent, Investments
Hi Ellen Great post I did not know the bank ate any deficiency. I think that is a huge relief for elderly folks to know they are not leaving there heirs in a jam...........Brad
Jan 12, 2011 05:58 AM #5
Rainer
92,374
Ellen Wright Adams
Academy Mortgage.......We are a Equal Housing Lender - Eugene, OR
LoansByEllen- Licensed in Oregon

Larry:  It really can be the right thing for some people; I've had many examples of a Reverse Mortgage literally changing lives - no more worrying about the mortgage & medical expenses.  It's a blessing to watch that kind of freedom for seniors.

Tom:  Please do bookmark this....and there is more coming! 

Roy:  How wonderful - a re-post...I'm honored; you've got a beautiful picture there.

Mary:  A re-post - as I told Roy above - I'm honored!  I took a look at it and sincerely appreciate your compliment.  Nothing like being a newbie and getting your blog re-posted!

Brad:  Yeah, it's a little known fact.  And I agree it's a relief for the elderly not leaving their heirs with a mess; I've had this question asked more than once, so when the 'Never Answer A Question More Than Once' was announced, I knew this would be a perfect question.

Thank you ALL for reading my post!

Jan 12, 2011 09:43 AM #6
Rainmaker
257,652
Joyce Godwin, Realtor, CRS
RE/MAX Elite Properties; Serving Cypress, Spring, Tomball, NW Houston - Houston, TX
RE/MAX Elite Properties

Hi Ellen, Thanks for the info!  Can you briefly explain who reverse mortgages are good for and who they would not be good for?

Jan 12, 2011 02:34 PM #7
Rainer
92,374
Ellen Wright Adams
Academy Mortgage.......We are a Equal Housing Lender - Eugene, OR
LoansByEllen- Licensed in Oregon

Joyce:

Thanks for reading my post.  I will make this a blog topic & email it to you specifically.  I appreciate the question.

 

 

 

 

Jan 12, 2011 06:05 PM #8
Rainmaker
2,799,021
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale-Probate & Trust Specialist

Ellen, Every time I hear the word “reverse mortgage” I cringe. You have provided good information about reverse mortgages. I imagine there are circumstances where a reverse mortgage is the best course of action for a homeowner.

Jan 13, 2011 02:50 AM #9
Rainer
92,374
Ellen Wright Adams
Academy Mortgage.......We are a Equal Housing Lender - Eugene, OR
LoansByEllen- Licensed in Oregon

Kathleen:

Yes Kathleen, there are times when a Reverse Mortgage is the best course of action.  The biggest scenarios I've seen are 1) job loss and not enough money to pay the mortgage, 2) unexpected medical expenses, and 3) simply not enough to retire on! 

There are so many false statements/myths about Reverse Mortgages.....stay tuned, I am working on a series of Reverse Mortgage blogs, you've just read the first one!

 

 

Jan 13, 2011 01:03 PM #10
Rainmaker
257,652
Joyce Godwin, Realtor, CRS
RE/MAX Elite Properties; Serving Cypress, Spring, Tomball, NW Houston - Houston, TX
RE/MAX Elite Properties

Hi Ellen, Thanks (in advance) for making a (future) blog topic out of my question.  I will be looking forward to it.  I subscribed to you so I won't miss it.  Thanks again.

Jan 13, 2011 01:29 PM #11
Rainer
92,374
Ellen Wright Adams
Academy Mortgage.......We are a Equal Housing Lender - Eugene, OR
LoansByEllen- Licensed in Oregon

Thank you for subscribing Joyce!

Visit LoansByEllen.com now!

Jan 13, 2011 02:31 PM #12
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Ellen Wright Adams

LoansByEllen- Licensed in Oregon
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