When Does a Reverse Mortgage Have to Be Repaid?
A reverse mortgage is a viable option for baby boomers looking to supplement their retirement income, and have enough tucked away for a rainy day or as part of a retirement planning option. If you are 62 years of age and older, live in your primary residence, and have enough in your home, you may qualify for a reverse mortgage.These requirements are changing, and soon, but, as of now, they are still in place.
It's crucial to know though, from the very beginning, what will trigger the repayment of your reverse mortgage.
Typically, a reverse mortgage does not have to be repaid until the borrower(s) passes away.
However, if the borrower(s) fails to do any of the following, the reverse mortgage may become due and payable:
- Moving to a new "primary residence." In order to qualify for a reverse mortgage you must live in your primary residence. If you chose to move from your primary residence, the loan will become due. This does not mean that you can't take an extended vacation, to another country or a summer home, but make sure you are aware of how long you can be out of your primary residence before you are in breach of your reverse mortgage contract.
- Being out of the home for a year or more. This is crucial if you chose to take an extended vacation as you can't be out of your primary residence for more than 12 consecutive months. For example, if you are sick or injured and require extended care at an assisted living facility, your reverse mortgage loan may become due and payable. If there is a second borrower on the contract, however, as long as one of you stays in the home, you are not in breach of your contract.
- Failure to pay your property taxes and homeowners insurance. If you obtain a reverse mortgage, it is up to you to continue to pay your financial obligations. In the past, failure to pay these requirements have caused the loan to become due and payable. In the future, these requirements will be covered by mandatory set asides to cover property taxes and homeowners insurance to better protect homeowners.
- Allowing the property to fall into disrepair. It's important to maintain the condition of you home as stipulated by FHA guidelines. Remember, an extended stay is not a violation of your contract but, any act that allows the residence to fall into disrepair while you're away can make the loan due and payable. Protect your investment, by making sure your property is in the best condition possible.
At PS Financial Services, a reverse mortgage company in Florida, we disclose everything to the best of our ability. In addition, applicants are required to attend mandatory couseling, ensuring that our clients are, not only aware of what is expected of them, but they have heard everything twice.
If you think a reverse mortgage is right for you, or simply have questions, give us a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. If you're ready to take the plunge into comfortable retirement, we are here to help.
Click here for more information about the elimination of the reverse mortgage program as we know it: