A Common Myth: HECM and Home Ownership
A reverse mortgage is a specialized type of loan only available to a certain segment of the population. With this type of loan, clients use the equity they have built in their homes as collateral for the HECM. It is a common misconception, however, that a person forfeits ownership of his or her home in exchange for a reverse mortgage. On the contrary, HECM borrowers continue to own their homes and live in them without paying a mortgage. If you are curious about the specifics of a reverse mortgage, contact us. Our team is happy to meet with you at our office or in the comfort of your own home. Great Florida Lending Inc. serves clients in the whole of Florida. We are passionate about helping our clients achieve their financial goals.
Taking Advantage of Your Home Equity, Smartly
For many seniors, the equity they have built in their homes is a primary facet of their wealth. An HECM provides borrowers access to a credit line or cash flow using the equity in their homes as collateral. This does not mean that ownership of the home at any point will transfer to the lender’s possession. Rather, the borrower will continue to own and live in the home for the rest of his/her natural life or until he/she decides to sell the property.
What Happens After the Borrower Dies?
Once the borrower who obtained the HECM loan dies, his/her heirs are fully protected from any financial responsibility. Any heirs will inherit the borrower’s home, unless otherwise negotiated in a will or other agreement. Even at this point, the reverse mortgage lender does not own the home.
If the HECM borrower’s heirs choose to keep the home, they are able. They must only pay off the remainder of the loan owed for the HECM (no more than 95% of the appraisal value of the home). If they would, instead, like to sell the home to help pay off the reverse mortgage, they are able.
If the borrower’s home sells for more than what is owed on the HECM, then the heirs will retain any additional funds. Even more importantly, they are never held liable for remaining debt if the home should sell for less than the remainder of the loan.
What Happens If the Borrower Decides to Move?
If you enter an HECM and later decide to move, you may do so freely. You will simply need to pay the remaining balance of your HECM loan. This type of federally mandated loan is designed to stay flexible even as a senior’s goals or needs change.
A Fresh Start for You
Whether you would benefit from additional funds provided by a reverse mortgage or would consider choosing a reverse mortgage for purchase of a new home, we can help. Contact Great Florida Lending Inc. for honest answers and feedback on reverse mortgages. We serve clients in the whole of Florida. We are happy to meet you in our offices or at your home to get started today.
