When you have a reverse mortgage there are only a few specific instances that can cause a default of the loan. If you fall behind on your taxes you could face a default. This will include personal, property, tangible, estate, business or investment taxes. Tax debt is the only type of debt that can attach to a home and require payment before the mortgage holder is paid. Since the home sale is what will pay for the reverse mortgage proceeds, the lenders will not allow a person to become indebted to the government. If you allow the home to go without repairs you can also face default. Lenders or mortgage broker in Colorado Springs depend on the maintenance of the home to keep it in sellable condition. If the house is not sellable they will not be able to reclaim the money they paid out.
Are There Other Ways I Can Default On A Reverse Mortgage?
If you no longer reside in the home on a full time basis you can default on the loan. You must make sure, prior to signing the contract, that you understand the residency requirements. If you need nursing home or rehabilitative care you will not be considered in default unless the stay at these facilities extends for a certain length of time. This generally is 9 or 12 months. If you move to another residence or stay in your second home for more than 6months out of the year you may also face default. Clarify the specifics before accepting the loan.
What Happens if I Default On My Reverse Mortgage?
If you default on your reverse mortgage the lender will, at first, give you an option to rectify the situation. If you are unable to clarify the problem, the home will be placed up for sale to repay the debt. If you are still living in the home, you will have the option to repay the loan by other means before having the house placed up for sale.