Our clients who have heirs to their property always wonder what they need to tell their heirs about the reverse mortgage program. With the reverse mortgage program it is important to discuss how it affects them to make sure there are aware of their options. Here are some important things to let your heirs know before going forward with the reverse mortgage program.
You are not required to make a monthly mortgage payment*
Some heirs hear of their loved one going over the benefits of the reverse mortgage and think that it’s too good to be true. Have a mortgage and not have to make a payment. With a reverse mortgage the homeowner is not required to make a monthly mortgage payment.
Benefits you in more than one way
For senior homeowners who choose the reverse mortgage program they find it greatly improves the quality of their life. It gives peace of mind knowing you can stay in your home for the rest of your life. It can give you financial relief from having to make a monthly mortgage payment. You can have the peace of mind knowing the program is insured by the Federal Housing Administration. And you remain the owner of your home**. The lender is not on title of your home. There are many benefits of the program that your heirs may not know.
Options your heirs have
One thing your heirs will be concerned about is what happens to your home after you are no longer living in it. Whether that is because you have to move out or pass away your heirs will have a few options with the reverse mortgage loan. Here are their options:
Option 1: Your heirs can sell the property – If your heirs choose to sell the property and the proceeds exceed the value of the home, they can keep the difference. For cases where the proceeds from the sale of the home are insufficient to pay off the loan, then the Department of Housing and Urban Development (HUD) absorbs the difference as long as it is an FHA insured loan. If it is not an FHA insured loan the difference would be covered by the lender. In either case the heirs are not responsible.
Option 2: Your heirs can keep the home – If your heirs choose to keep the home they will have to refinance 95 percent of the home’s value or the balance of the loan, whichever is lower.
Option 3: Your heirs do not have to be responsible for the home – What is great about the reverse mortgage is your heirs do not have to be responsible for the home. If your heirs do not want anything to do with your home after you are no longer living in the home then they will not be responsible for payment of any kind.
The reverse mortgage program has helped thousands of seniors for over 25 years. If you are considering the program make sure to include them in your decision making. It will help not only you but your heirs in knowing exactly what their options are. Do you heirs still have questions about the program? Give us a call. A licensed expert can answer any questions your heirs might have about the program.
*Homeowner is still responsible for taxes, insurance, and property maintenance.
**You remain responsible for counseling costs, taxes, insurance, and maintenance expenses.