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QUESTION:
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Is it possible to walk away from a Reverse Mortgage? |
Taking out a reverse mortgage 4 years ago seemed a good idea at the time as my husband and I had both unexpectedly lost our jobs when we were in our late 60s.We then had difficulty managing mortgage payments on just Social Security. (Most of retirement savings in Mutual Funds had tanked). We did not get as much as we had hoped from RM due to high costs but as we could not sell the house for enough to pay off mortgage it seemed the way to go.
Our home insurer just dumped Florida this year and we have so far been unable to find another (apart from Citizens just for hurricane insurance). The several we have approached want us to make fairly expensive upgrades to the house before they will even consider insuring us. (One refused because we did not have central A/C and heating) If we do the upgrades we will probably only have enough $$s left to pay taxes and insurance for another 3 years.
If we are going to be foreclosed on eventually for not paying taxes etc. I would rather just walk away now while we still have enough money to buy a very small condo.
What consequences would we face if we did this? Assuming we even COULD walk away from a non-recourse RM mortgage would there be problems buying another property for cash. (we are talking less than $20,000) |
 | asked by notsosunny, 5/17/2011 |
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Categories:
Reverse Mortgages
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| ANSWERS: |
| Answered by: NewRetirement Editor San Franscisco, 05/24/11
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Since you have a complicated situation it's probably a good idea to talk with a local real estate attorney. To save money you may be able to find one that will answer questions like this in the course of providing pro bono community service.
Since a reverse mortgage is non-recourse you should be able to walk away and just turn the keys over to the bank to satisfy the loan. However, since it is a loan this will likely impact your credit which in turn will impact your ability to get a purchase mortgage (if you need a mortgage) to buy the condo.
You may be better of negotiating with the reverse mortgage loan holder and working with them on your situation since the insurance situation is not entirely in your control. Login to rate this answer: |
| Answered by: Raymond Denton, 10/16/11
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Since your Reverse Mortgage is only 4 years old, there's probably plenty of equity still remaining in your property, and it belongs to you. Instead of walking away, I suggest selling the property, pay the Reverse Mortgage Lender the amount owed to them, and put the remaining equity in the bank. Login to rate this answer: |
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