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Who Owns the House in a Reverse Mortgage?

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Deciding on a financial plan for retirement takes time. One viable option is to take out a reverse mortgage on your home, but you may have some questions before organizing this type of agreement.

A reverse mortgage is the same as a Home Equity Conversion Mortgage (HECM), and the Federal Housing Administration (FHA) will insure a HECM.

The details below further describe who owns the property in a reverse mortgage and what you can do to make sure you are borrowing money in a way that makes sense for you.

Defining a Reverse Mortgage

Reverse mortgages enable homeowners to convert their property’s equity into a lump sum or monthly payouts. You can use the money you receive from a financial institution to pay credit card debt, make home improvements or for any purpose.

Only individuals who are 62 years of age or older can qualify for reverse mortgages.

If I Take Out a Reverse Mortgage Loan, Does the Lender Own My Home?

Under a reverse mortgage plan, the title to your home belongs to you. Similar to a traditional home mortgage agreement, reverse mortgages allow you to borrow money and place your home as security for the loan.

You must continue to follow through with certain responsibilities after organizing a reverse mortgage to prevent foreclosure. This includes keeping up with your property taxes, paying for homeowner’s insurance and maintaining the property with necessary repairs, just like with a traditional mortgage.

If a homeowner passes away and they have a reverse mortgage plan in place, it is the responsibility of the estate to pay back the loan through the sale of the property or refinancing. It is no different than the requirements with a traditional mortgage except the heirs have more time to repay the loan with a reverse mortgage, up to one year.

The Benefit of Non-Recourse Protection

A reverse mortgage is often referred to as a non-recourse loan. Put simply, if a borrower or heir is incapable of paying back the reverse mortgage loan because the value of the property decreases before it is time to sell, a financial institution does not have the right to ask for other assets to make up the difference in cost.

Under reverse mortgages and traditional home mortgages, a property will serve as collateral when a borrower violates their end of the loan agreement. Only in this situation can a reverse mortgage company or bank take your home.

Under What Circumstance Does the Bank Own Your Home in a Reverse Mortgage?

A reverse mortgage agreement does not require a homeowner to give up the title to borrow money. If you currently own your home and set up a reverse mortgage, you or an heir will only give up ownership of the property if the terms of the agreement are breached.

The financial institution in which you took out a reverse mortgage will explain the legal terms of your agreement and what you can do to ensure payments come in on time.

Home Reverse Mortgages and Leftover Equity

There could be a scenario when a homeowner decides to sell a property that they have a reverse mortgage on. Owners may choose to sell to pay back the loan balance or for relocation purposes.

Any equity remaining in the home becomes available to the borrower or their heirs once the reverse mortgage loan is paid back in full.

Are Reverse Mortgage Loans Backed by Insurance?

As stated previously, most reverse mortgages are structured as Home Equity Conversion Mortgages. HECMs usually include FHA insurance, which creates a safety net for individuals selling a home with a reverse mortgage.

This insurance is in place to protect borrowers and their heirs. You and your family members will never be responsible for paying back a loan sum that is larger than the appraised value of the residential property.

Choose Senior Lending Corporation for Reverse Home Mortgage Services

Senior Lending Corporation is based out of Tampa, Florida. We help individuals over 62 set up reverse mortgages to plan for retirement.

We’re Florida’s number one reverse mortgage company because we have a strong willingness to help and educate our clients. Our mission is to match you to the program that makes sense for your financial goals.

We cherish your trust, so we’ll treat you like family from the moment you reach out to us.

Call us today at 800-822-1190 or reach out to us online for details about how a reverse mortgage could be the right move for your financial future.

Reverse Mortgage Resources For Florida Homeowners

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