Can a Borrower Buy Another Home After Getting a Reverse Mortgage?
A reverse mortgage may not be a wise idea if a borrower plans to move or to buy another home within a few years.Prior to moving or buying another home, the borrower must pay off the reverse mortgage or sell the home to pay off the total amount owed.
Borrowers can pay off a reverse mortgage loan without prepayment penalties.
If there is not enough equity to pay off a reverse mortgage balance, plus interest and other expenses, a lump-sum of money may be needed to satisfy the amount owed.
Will Heirs be Required to Sell the Property if the Borrower Dies?
Heirs to a property that is secured via a reverse mortgage will typically need to inform the lender of their plans within 30 days of the borrower’s death.
Thereafter, the heirs will need to pay off the loan, sell the home, obtain a loan to refinance the reverse mortgage or return the title to the lender.
Can a Foreclosure Occur With a Reverse Mortgage?
Although, a borrower does not make monthly payments toward a reverse mortgage, a senior who gets too far behind on property taxes, homeowners insurance or homeowner association dues could risk losing their home via foreclosure.