Reverse Mortgage Repayment Terms .................................................................................................................................................... One of the reasons that reverse mortgage loans are so popular in the world today is specifically because of the flexibility involved in paying them back. Unlike home equity loans and other home loans that are similar, reverse mortgages do not have to be paid back every month. There are in fact specific situations that require the repayment of a mortgage, but none of them have anything to do with a monthly repayment. In fact, most companies and reverse mortgage lenders will cite six specific events that could occur for you to have to pay your reverse mortgage back. The first group of circumstances is covered below and the others are discussed in another article.
Scenario A
One of the things that are determined at the start of the reverse mortgage deal being done is who the loan is for. In other words, the borrowers of the loan are actually signified in legal terms so that the scenarios that pass can specifically apply to the people that are legally regarded as the loan borrowers. In the first scenario of repayment for a reverse mortgage, the repayment would have to be made when the last surviving borrower ends up passing away. In other words, if there were a husband and wife couple that specifically took out a reverse mortgage, both of them would have to pass away for repayment to occur under scenario A.
Scenario B
Scenario B is similar to Scenario A, but refers to the home rather than the actual lifetime of the people borrowing on it. Under Scenario B, a repayment would be required on the reverse mortgage if the last surviving borrower were to decide to sell the home. Because many of the people that take out reverse mortgages happen to be couples where both partners in the marriage are greater than 62 years of age, there are numerous situations that occur where one partner passes away and the second one decides to sell the house and move into something smaller. If that situation were to occur, then the reverse mortgage loan would need to be repaid in full from the funds acquired through the selling of the property.
Scenario C
Scenario C occurs when all of the borrowers are still alive, but decide to move out of the home. For example, if a couple where both partners were over 62 decided to take out a reverse mortgage and then a year later decide to move in with family (a very common occurrence), then the loan would need to be paid back. If other family members wanted to settle the loan for the borrowers instead of selling the house, that is definitely a possibility, but if the borrowers move, then the loan becomes due. Now, it is worthwhile to note that any of the events listed here or in the other repayment terms article occur, then the repayment will be due. Just because scenario A or B haven’t occurred does not mean that the loan is not due if scenario C occurs; it is most definitely due.
