Are You Stuck Once You Get a Reverse Mortgage?

If you have ever considered a reverse mortgage (for you or in advising someone you know), any number of concerns may have come to mind. Some of these concerns may not have even surfaced but were there in the back of your mind nonetheless. Once such concern is that, once they obtain a reverse mortgage, they must keep it forever.

What will happen with a reverse mortgage if the senior needs to move or sell the house? What about refinancing the house with a traditional loan and closing out the reverse mortgage? Or what if the owner receives a lump sum of money (such as an inheritance, lottery winnings) or has other means and wants to pay off their reverse mortgage? Can they make regular payments on a reverse mortgage similar to a traditional loan?

The answer is that the senior is never stuck with their reverse mortgage. There are no prepayment penalties and usually no obligation to keep the loan for a certain amount of time.

The senior is not restricted from selling their home – after all, it remains their home – the reverse mortgage is just that, a mortgage. And as with any mortgage, when the home is sold, the money first pays off any existing mortgage balance owing and the rest of it goes to the seniors (after any realtor commissions, etc).

If the senior desires to pay down or pay off their reverse mortgage while continuing to live in there, the situation is the same. They can pay off any amount owing on the loan and get rid of their reverse mortgage. Or they can send in monthly payments just like a traditional loan and keep the reverse mortgage. They are allowed to do whatever they want. But the key is that the senior is not required to make any monthly mortgage payments for as long as they live in the home.

The question now becomes how much the senior would owe on their reverse mortgage if they did in fact want to pay it off and/or sell their home. The answer is that they would only owe the amount of money that they have borrowed, including any interest that has been incurred. A competent reverse mortgage lender or counseling agency can calculate that amount based on your situation and project the total amount that would be owed in the future.

The reverse mortgage is not a permanent decision. In fact many seniors in recent years have been able to refinance their reverse mortgage into a new one with more favorable rates and terms, and additional cash out. Seniors can now scratch one more concern about the reverse mortgage off their list.

Reverse-Mortgage-Info.net is a division of FutureSafe Financial, specializing in California reverse mortgages and providing qualified reverse mortgages for seniors 62 years and older. Please contact Reverse-Mortgage-Info.net for more information and a free reverse mortgage quote.