OK, problems have arisen for surviving spouses because only the deceased spouse is listed as a property owner on the deed. In other cases, couples opt to put a reverse mortgage
in the name of the older spouse in order to maximize the loan’s proceeds.
Reverse mortgages, in contrast, require no repayments until they come due, when the borrower dies, moves or sells the house.
The amount you owe on a reverse mortgage grows over time. Interest is charged on the outstanding balance and added to the amount you owe each month. That means your total debt increases as the loan funds are advanced to you and interest on the loan accrues.
Although some reverse mortgages have fixed rates, most have variable rates that are tied to a financial index: they are likely to change with market conditions.
Reverse mortgages can use up all or some of the equity in your home, and leave fewer assets for you and your heirs.
Almost all reverse mortgages have a “nonrecourse” clause, which prevents you or your estate from owing more than the value of your home when the loan becomes due and the home is sold. However, if you or your heirs want to retain ownership of the home, you usually must repay the loan in full – even if the loan balance is greater than the value of the home.
When an heir resides (which would be your spouse in your case) with the owner prior to death - they have 3 months and can extend that up to 1 year (if they can show they are making reasonable efforts to sell the house) to make a decision about paying off the loan or selling the property.ime limit from the start.
So, if you pass - the reverse mortgage comes due.
Your heirs may:
1) Pay the balance due and keep the home
2) Sell the home and use the proceeds to pay off the loan
Your heirs keep any excess proceeds from the sale just like any real estate sale.
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