With a reverse mortgage, you retain the title to your home and do not have to make monthly repayments. But when the last surviving borrower sells the home, vacates the property for 12 consecutive months (as might be the case if the borrower enters a nursing home), or dies, the reverse mortgage usually becomes due. At such a time, the borrower (or the borrower's estate or heirs) can repay the reverse mortgage with funds from another source in order to keep the property. If this isn't done, the lender will require the sale of the property to secure repayment of the accumulated debt plus interest. If the proceeds from the sale of the property are greater than what's needed to repay the reverse mortgage, the remaining funds are remitted to the borrower or the borrower's estate. However, the repayment obligation is limited by the property's value; if the sale of the property doesn't bring in enough to repay the reverse mortgage in full, the borrower (or the borrower's estate) is not responsible for the difference.
In addition, a reverse mortgage may become due and payable, on demand, if the borrower, either by action or inaction, undermines the value of the property that secures the loan. Some conditions of acceleration and/or default include:
Not maintaining and/or repairing the home
Failing to pay property taxes
Failing to insure the property
Adding a new owner to the property's title
Incurring new debt that uses the home as collateral for the loan
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA (Opens in a new Window)/SIPC (Opens in a new Window). UniVest Financial Services is a trade name of UniBank. Infinex and UniBank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of, nor guaranteed or insured by, any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.