As a reverse mortgage specialist you might imagine I get slaughtered with questions from customers. One of the biggest concerns is what happens to the equity in the home after the borrower passes on.
Borrowers getting reverse mortgages can expect their lender to allow them to pull cash out of the equity of the home equal to 50% to 75% of the formal valuation of the house.
Reverse mortgage companies make profit on the interest accrued on those moneys loaned to the senior. The contract is the bank is repaid the loan plus interest upon the sale of the property. Many times this is after the death of the borrower.
Reverse mortgage companies are very careful about how much money they lend in relation to the value of the home. This is why age plays such an important role in this calculation.
The algorithms tell the lender it is making a calculated gamble to loan a borrower X amount of money. Lenders, like insurance companies know the deal, and way more often than not there will be equity remaining.
At death the home is typically willed to the heirs. The heirs are given roughly a year to sell the home. If it takes longer the lender normally allows extensions.
Lenders are in the interest business. They are not in the foreclosure business. While the home is being marketed for sale they are still making money. Therefore, if it is being marketed at a fair price by a professional realtor, extensions are normally granted.
Of course the home always gets sold and the mortgage company gets their fair share of the proceeds. They are not, as many people still believe, entitled to all of the remaining proceeds.
If any equity is left over the heirs get it as outlined in the will. It is a common misconception that the reverse mortgage lender is entitled to any of the remaining equity.
Every so often more will be owed than the home is actually worth. In this event the heirs are in a safe zone.
All FHA insured reverse mortgages have a non-recourse clause. This means, in the event described above, the mortgage company can't come back on the borrower or the estate for the deficiency.
Regardless of some of the mythology reverse mortgages are fairly safe for the borrower and estate. - 16928
Borrowers getting reverse mortgages can expect their lender to allow them to pull cash out of the equity of the home equal to 50% to 75% of the formal valuation of the house.
Reverse mortgage companies make profit on the interest accrued on those moneys loaned to the senior. The contract is the bank is repaid the loan plus interest upon the sale of the property. Many times this is after the death of the borrower.
Reverse mortgage companies are very careful about how much money they lend in relation to the value of the home. This is why age plays such an important role in this calculation.
The algorithms tell the lender it is making a calculated gamble to loan a borrower X amount of money. Lenders, like insurance companies know the deal, and way more often than not there will be equity remaining.
At death the home is typically willed to the heirs. The heirs are given roughly a year to sell the home. If it takes longer the lender normally allows extensions.
Lenders are in the interest business. They are not in the foreclosure business. While the home is being marketed for sale they are still making money. Therefore, if it is being marketed at a fair price by a professional realtor, extensions are normally granted.
Of course the home always gets sold and the mortgage company gets their fair share of the proceeds. They are not, as many people still believe, entitled to all of the remaining proceeds.
If any equity is left over the heirs get it as outlined in the will. It is a common misconception that the reverse mortgage lender is entitled to any of the remaining equity.
Every so often more will be owed than the home is actually worth. In this event the heirs are in a safe zone.
All FHA insured reverse mortgages have a non-recourse clause. This means, in the event described above, the mortgage company can't come back on the borrower or the estate for the deficiency.
Regardless of some of the mythology reverse mortgages are fairly safe for the borrower and estate. - 16928
About the Author:
Get the skinny in great guide book on California reverse mortgage here. Many questions answered regarding the California reverse mortgage in this educational site.
No comments:
Post a Comment