Things to know about re­verse mort­gage

Boston Herald - - NEWS - — SUN SENTINEL

I have a re­verse mort­gage on my home. Am I al­lowed to sell my prop­erty to pay off the re­verse mort­gage and keep my eq­uity or do the lenders just get the whole thing? If I die, can my son sell the prop­erty and keep any eq­uity?

A re­verse mort­gage is dif­fer­ent from a typ­i­cal mort­gage be­cause you do not need to make monthly pay­ments. In­stead, the bal­ance you owe the bank grows each month. The bank is re­paid only un­der cer­tain cir­cum­stances, such as your death or if you move to an­other home.

How­ever, if your home is worth more than the mort­gage bal­ance, that ex­tra amount, known as your eq­uity, be­longs to you or your heirs. If the bal­ance tips the other way and the loan is more than your home’s value, you or your heirs will have to turn over the house, but will not be re­spon­si­ble for any ex­tra.

You can sell your home now and keep the eq­uity, if you want. If you die, your son, pro­vided he is also your heir, will have a cer­tain amount of time, typ­i­cally 12 months, to re­pay the loan in full, usu­ally by sell­ing the home.

If you are con­cerned about the bal­ance of the mort­gage and want to make sure there is eq­uity for your heirs, there is noth­ing stop­ping you from mak­ing par­tial pay­ments while you are alive.

Re­verse mort­gages are not for ev­ery­one, but can be a use­ful tool in the right sit­u­a­tion. If you want to con­tinue liv­ing in your home with min­i­mal monthly pay­ments, per­haps due to your re­tire­ment, a re­verse mort­gage may be right for you.

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