When to pay back reverse mortgages

Jessica
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Reverse mortgages are payable only when the last surviving borrower dies, sells the property, permanently moves out or when he reaches the end of the loan period. A permanent move is implied when you, the co-borrower, or a qualifying relative has occupied the home for at least 1 year. If you die, the lender will not be able to take the title if your heirs can repay the loan.

When the loan may be in default


The loan will be in default if:
  • You or the co-borrower have filed bankruptcy.

  • The borrower donates or abandons the home

  • You haven't paid property taxes

  • You haven't maintained your home or paid for repairs

  • Your home is no longer insured
Moreover, if the loan has an acceleration clause , the lender may require you to pay down the mortgage if:
  • A co-owner has been added to the property title

  • You have rented out the property to a non-relative

  • You have taken a new loan on your home

  • You have changed the property's zoning classification
Make sure you check the loan documents so you know what situations will cause your loan to default and your repayments to accelerate.
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Last updated on September 8, 2013

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Reverse mortgages are a great option for senior citizens mainly because of the payment plan. If the senior citizen is staying in the property and have declared it as his or her primary residence, then he or she will not be liable for the mortgage payments. However, the senior citizen will have to maintain the property as well. If they leave the property, then the loan amount will become due. After the death of the borrower, the heirs can either refinance or give away the property to the lender so that he can recover his dues.

 

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