Paying off a Reverse Mortgage with low cash
- Posted by admin on January 20th, 2009 filed in Reverse Mortgage Info
- 1 Comment »
Q: What is the best way to pay off a reverse mortgage if you don’t have the cash?
A: That’s an unusual situation. A reverse mortgage, to brief other readers, is for people age 62 and older to convert equity in their homes to cash. It works the same way as a regular mortgage except in reverse: A lender would determine the value of the home and provide you with the money. It comes due only when you sell, move out for 12 consecutive months or die.
If you sell, the buyer’s money could pay off the bank. If you move, you most likely should sell the house to pay for it, says Scott Tucker, a mortgage broker in Chicago and author of the newly published “Reverse Mortgages … from Z to A.”
If you do decide to prepay the reverse mortgage early, you can do so in any number of ways and with no prepayment penalties. But because you aren’t currently making required monthly payments, Eric Bachman, CEO of Oakland, Calif.-based Golden Gateway Financial, says there are very few times when it would make sense to consider an early payoff.
If you move or sell your home and the reverse mortgage becomes due, then it’s important to know that because it’s a non-recourse loan you never have to pay more than the value of your home, even if the loan amount is larger. This protects you or your heirs from owing more than the home is worth.
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January 29th, 2009 at 11:15 am
It’s a good article giving insights to the reverse mortgage loan. The important thing is that we must take utmost care in selecting the loan. I think it is better to seek help from any reputed companies in this field such as Bills.com as these companies have lot of resources to find the right loan matching our financial health.