Will My Kids Have To Pay My Reverse Mortgage
Many seniors are concerned that they may leave debt for their children or estate to pay off after they pass away. Your children are not required to pay for any portion of the reverse mortgage shortage should there be any. It is unlikely that there would be a shortfall on the mortgage to start with, however the FHA insurance protects your children and estate from paying any shortfall should there be any.
If the reverse mortgage does exceed the value of the home, your heirs will need to decide if they wish keep the home or not. If they want to keep it they need to pay off the reverse mortgage balance. If they choose to not keep the home they can turn it over to the lender to sell the property. The lender will then take the loss on the difference between the sales price and the payoff of the mortgage. FHA insures most reverse mortgages. This insurance helps reimburse the lender from any such losses should there be any. However, if there is equity in the home, your children may keep the equity as outlined in Myth 2 by simply refinancing the home and paying off the reverse mortgage or selling the home and keeping the equity.
Is there a catch?- Yes, your closing costs on the reverse mortgage includes an insurance premium to FHA that pays for this protection. As a result, a reverse mortgage typically carries slightly higher closing costs than a tradition mortgage. You and your heirs are therefore protected in part from the housing market. You get the equity if home values go up, the lender takes the loss if the home is worth less than the payoff of the mortgage.
As a result, reverse mortgages not only gives you payment free, tax free money, but it also protects you from possible losses in the housing market. You can never be forced to move or make payments on the mortgage as long as you keep the home as your primary residence, and your heirs gets the equity in the home when you pass away, but are not liable should there be negative equity in the home.
And remember, money used to improve the home, such as renovating kitchens and bathrooms will most often improve the homes value, all while making the home fit your
If the reverse mortgage does exceed the value of the home, your heirs will need to decide if they wish keep the home or not. If they want to keep it they need to pay off the reverse mortgage balance. If they choose to not keep the home they can turn it over to the lender to sell the property. The lender will then take the loss on the difference between the sales price and the payoff of the mortgage. FHA insures most reverse mortgages. This insurance helps reimburse the lender from any such losses should there be any. However, if there is equity in the home, your children may keep the equity as outlined in Myth 2 by simply refinancing the home and paying off the reverse mortgage or selling the home and keeping the equity.
Is there a catch?- Yes, your closing costs on the reverse mortgage includes an insurance premium to FHA that pays for this protection. As a result, a reverse mortgage typically carries slightly higher closing costs than a tradition mortgage. You and your heirs are therefore protected in part from the housing market. You get the equity if home values go up, the lender takes the loss if the home is worth less than the payoff of the mortgage.
As a result, reverse mortgages not only gives you payment free, tax free money, but it also protects you from possible losses in the housing market. You can never be forced to move or make payments on the mortgage as long as you keep the home as your primary residence, and your heirs gets the equity in the home when you pass away, but are not liable should there be negative equity in the home.
And remember, money used to improve the home, such as renovating kitchens and bathrooms will most often improve the homes value, all while making the home fit your
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