Reverse Mortgage Facts
Understanding whether your reverse loan will leave you with equity depends on a number of factors.
- How much money are you trying to take out on your reverse mortgage? If you want the maximum amount possible then your equity will be much lower and there will be a higher possibility of your property being fully owned by the lender once the home is sold.
- What are real estate prices doing in your area? If you are in an area of fast growth then you may have a lot of equity left in your home, but if you live in an area where house values are plummeting then the lender may own your entire house when it is sold.
- Your lifespan. The longer you live in your home the more time interest will be charged on the loan. Therefore, depending on how long you continue to live in your home, there may be plenty of equity left, or the lender may own your home.
HUD reverse mortgage programs allow certain types of homes including:
- Single-family homes.
- Multi-family homes with up to four units in them.
- Condominiums and Townhouses.
- Even some types of manufactured homes qualify.
Some homeowners worry that they could lose their home with reverse mortgages, especially if the full amount of equity is tapped out early. There is a possibility, but it depends on the up-keep you do on the home. Some of the facts you need to know include:
- The lender CAN NOT kick you out of your home. If the lender’s fees and interest rate charges accumulate to the point that the lender owns all of the equity in the home, they still can not make you leave. You do not have to move out of your home.
- The lender CAN kick you out of your home if you fail to pay your property taxes. By not paying your property taxes you can get a lien against the property and the lender will not allow that to happen. This information will be in your mortgage paperwork, so read it carefully and make sure to keep up with your tax payments.
- The lender CAN kick you out if you let the house fall apart. Your lender loaned you the money based on the fact that your house will eventually sell and pay them back. If you let the repairs and improvements on the house slide then the market value will decrease and the lender may not get their money back. Make sure you keep the house in the same condition as it was when you took the loan.
- You must live in your home. The lender CAN sell your home if you move out or are in a long-term care facility. Make sure to read your mortgage paperwork for the time frame, but most lenders give you up to one year to live outside of your home in case of temporary injury or illness, but after one year they no longer consider you the primary residence of the home and will see your property.
Find more information on HECM counseling programs. Here you will find links to lists by state for HUD and FHA approved HECM counselors so that you can get the required counseling you need to get a reverse mortgage through HUD. No matter whom your lender was on the purchase of your home you can still use HUD to take out a reverse mortgage on your home.