Reverse Mortgage For Dummy - How Reverse Mortgage Affects Surviving Members of the Family
In order to provide financial assistance to senior citizens having to live on pension and whatever savings they may have stashed away, the US government had introduced reverse mortgage plans which would allow senior citizens to liquidate the value of their home equity and utilize this as an additional source of funds. Since a reverse mortgage awards the funds based on the amount of the home equity, the senior citizen is not required to repay the reverse mortgage taken out unless the borrower sells the property and moves out of the home. But what if the borrower dies and there is an existing reverse mortgage that has been taken out on the home?
Reverse mortgages have been offered in order to provide sufficient funding to senior citizens in order to live their remaining years in comfort. How the death of the borrower who had taken out a reverse mortgage on the home would greatly depend on the surviving family he or she has left behind. If the borrower is married and his or her spouse is still living, then the reverse mortgage would not need to still be repaid since the reverse mortgage has been structured in such a way that the spouse of the borrower becomes a co-borrower. When the borrower passes away, the co-borrower becomes the principal borrower and the same terms and conditions with regards to the reverse mortgage that has been taken out.
The situation is different when both the borrower and the spouse pass away. Since the ownership of the home will now have to be changed and transferred to the beneficiary or beneficiaries, the reverse mortgage taken out on the equity value of the home would need to be repaid. The beneficiary would be notified of this and the schedule of payments that would need to be made. The beneficiary would then be given a year to repay the reverse mortgage in full with the corresponding interest that the borrower had agreed upon.
This may lead many heirs and surviving relatives to become frustrated since instead of inheriting some funds or assets that may be able to help them now, especially with the country having to face a financial crisis they have inherited a debt that now needs to be paid. However, when looked into the benefits that have been provided by the reverse mortgage to the senior citizen and his spouse, this would make the surviving members of the family understand why the mortgage was taken out in the first place.
In order to avoid having to leave your family behind with any outstanding debt brought about by the reverse mortgage that you are planning to take out, it would be a good idea to first consult the advice of a lawyer or financial advisor. He or she would be able to give you suggestions on the necessary precautions that you would need to take in order the mortgage you have taken out would not be passed on to your surviving family at the time of your demise.
For more information on how you can protect your surviving family from inheriting the burden of repaying the reverse mortgage you have taken out, you can visit any of the following websites. After all, nothing could be more frustrating on the part of your surviving family than having to inherit a number of outstanding debts while having to go through the painful process of grieving as a result of your passing:
About the Author
For more information on reverse mortgages and pitfall as well as tips and strategies in protecting yourself from reverse mortgage scams, do visit http://www.reverseloancontract.com, the premier online resources for reverse mortgage.
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