• Question
  • reverse mortgage maximum amount

    Asked by someone from Greenfield, CA on 4/25/2014

    My parents took out a reverse mortgage several years ago, when their home had a much higher value. They took out about $450K, and now owe over $600K. The house is probably worth 700-900K now, but the housing market in their area is very soft. At the time of the reverse mortgage the house was over $1M. Once their mortgage gets to $625 limit because of the accrued interest, I assume that they can continue to stay in their home with no additional cost except the interest accrues on the loan. They do not incur any out of pocket expenses?

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  • Categories: Repaying, Reverse Mortgages

Answers

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  • As long as the home remains the primary residence of either of your parents the reverse mortgage does not become due.

    They are still entitled to remain in the home until the last borrower leaves the home. They would still be responsible for maintaining property taxes, homewoners insurance and upkeep of the residence.

    Other than that interest and servicing fees will continue to accrue. This is a non-recourse loan so if the balance outgrows the appraised value of the home neither the borrower(s) or the heirs are obligated to pay this difference, however if there are proceeds remaining between the sale value and the reverse mortgage loan and accrued fees/interest due the borrower(s) or heirs are entitled to the difference.

    I hope this helps answer your question.


    If you still have questions, or would like us to help you evaluate your situation, we can do that as a free service to you. Feel free to call us at (Toll Free) 888-411-RETIRE (7384).

  • Login to rate this answer:   Answered on 4/29/2014
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.