Defaulting on a Reverse Mortgage

Many seniors use reverse mortgages to tap the equity in their home to give themselves financial security. Although getting a reverse mortgage can increase your income stream and stay in your home, don’t think that it’s impossible to end up losing your home. Here are some scenarios that could result in defaulting on a reverse home loan.

1. Dropping the ball on your financial obligations, such as tax payments and insurance. Reverse mortgage lenders require homeowners to keep these payments current or risk having their loan called in. If you think you’re paying too much for insurance, get quotes from several companies to see if you need a different policy.
2. Letting your property fall into disrepair. Make sure that you budget some of your income to keep up with home repairs and maintenance.
3. Declaring bankruptcy can cause you to default. Remember, getting a reverse home loan may boost your income, but you’ll still need to be smart about budgeting your money and managing it well.
4. Abandoning your home or donating it. If you have plans to move spend the time necessary to try and sell your home.
5. If the government condemns your property or needs it for public use, such as building a highway.
6. If it is determined that you have perpetrated a fraud.

Paying Reverse Mortgage Early

Your lender can also call in your loan early if you rent out part of your home, take on a new debt against your home, or add another owner to the title. Changing the zoning on your property could also result in the lender requiring an early repayment of a reverse mortgage.

Make sure you understand the ins and outs of reverse mortgages before signing up. Start by getting reverse mortgage quotes here and contacting a reverse mortgage counselor to discuss all your options.

This entry was posted on Wednesday, September 23rd, 2009 at 12:39 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.