Borrowers may leave the home to loved ones as they wish, and heirs may still choose to sell or keep it after repaying the loan. There are various methods that borrowers or heirs can use to repay the loan when it is due.
What happens to the family home?
How do we repay the loan and how much will we owe?
The loan is repaid once both spouses have left the home or the loan terms are not complied with. If the home is sold, the loan (including interest and fees) is repaid, and any remaining equity goes to the borrower or the borrower’s estate.
What happens if our parents leave their home before receiving their full reverse mortgage loan?
If your loved one leaves the home, any part of the loan that hasn’t yet been disbursed remains as equity in the home and becomes part of the estate. The reverse mortgage becomes due and the heirs are given a reasonable time to sell the home. They also have the option to keep the home by paying off the reverse mortgage loan or refinancing. Otherwise, the home is sold with proceeds first paying off the reverse mortgage loan, and the remaining balance going to the estate.
We encourage loved ones to get involved and go through the loan process alongside family members, so that everyone understands how a reverse mortgage works. We realize that a reverse mortgage is a big financial decision and we suggest the following tips to help guide your family’s reverse mortgage discussion:
Tip 1 - Living Choices
Where are your parents going to live as they get older? Do they want to stay at home or move to an assisted living facility? These questions can help your family better understand about your loved one’s future living preferences.
Tip 2 - Finances
Have your parents calculated the costs involved in meeting their retirement goals? Have they consulted with a financial advisor to find out how much money they will need for long-term care expenses? Can they afford to maintain their current lifestyle, and if not, can you afford to supplement their income? Knowing your parents’ financial situation can help plan for the future – resulting to greater peace of mind for everyone. Have your parents planned financially for their potential senior care health needs?
Tip 3 - Health
Have your parents outlined their goals for a healthy retirement lifestyle? Are their health screenings and medical checks up-to-date? Addressing health concerns is valuable as our parents advance in age.
Tip 4 - Talk With a Professional
Did you know that you can use a reverse mortgage to fund home modifications? Or that your loved one will continue to own his/her home when they get a reverse mortgage? Our reverse mortgage professionals are trained to help you explore your parent’s financial situation, provide you up-to-date facts and walk you through the process every step of the way.
Contact us for more information
Brenda Houglum: (218) 790-0954
Sharon Johnson: (701) 793-2755