A reverse mortgage allows homeowners to receive monthly cash payments based on the equity they have in their property. While this can be a beneficial tool for retirees seeking an additional income stream, it can create complications for those who inherit the property after the original owner’s death.
Understanding Repayment Rules for Inherited Reverse Mortgages
When a homeowner with a reverse mortgage passes away, it will trigger the repayment of the loan. This means that the beneficiary of the home must settle the full loan balance. Additionally, if there is no surviving co-signer who continues to live in the home, repayment cannot be deferred. Therefore, it is crucial to understand the implications if you inherit a property with a reverse mortgage.
Options for Managing an Inherited Reverse Mortgage
If you inherit a home with a reverse mortgage in Myrtle Beach, you have several options to consider:
Sell the Property to Repay the Loan
One common approach is to sell the home and use the proceeds to pay off the reverse mortgage. If the sale price of the property goes beyond the balance of the loan, the remaining funds can be used for other expenses. However, if the loan balance is bigger than the value of the property, you are only responsible for repaying what the property is worth.
Pay Off the Loan to Retain the Property
Another option is to pay off the Myrtle Beach reverse mortgage yourself to keep the property. This can be challenging unless you have sufficient funds available or can qualify for a new mortgage. Therefore, it’s essential to evaluate your financial situation and ensure you meet the necessary credit and income requirements.
Transfer the Deed to the Lender
You may also choose to deed the property back to the lender. This process, known as a deed in lieu of foreclosure, allows you to relinquish ownership without going through foreclosure. Consequently, the lender will own the property, and you will not be responsible for any further financial obligations concerning the home.
Walk Away from the Property
Lastly, you can choose to walk away from the property, allowing the lender to foreclose. While this means giving up the home, it ensures that you won’t be personally liable for repaying the loan beyond the value of the property.
Knowing Your Rights as an Heir
It’s important to understand your rights if you inherit a property with a reverse mortgage. For instance, lenders need to notify heirs when the loan becomes due. Heirs will then get a period to decide how to proceed, with an initial 30-day decision window and up to six months to repay the loan or sell the property. Extensions may be available in certain situations, providing additional time to manage the process.
Inheriting a property with a reverse mortgage can be complex, but knowing your options and rights can help you make informed decisions. Whether you choose to sell the home, pay off the loan, deed the property back to the lender, or walk away, understanding the implications of each choice is vital.
Have you inherited a property with a reverse mortgage? Take the time to explore your options and understand your rights to make the best decision for your situation. Consult with David Stacy Reverse Mortgage Specialist to navigate this complex process effectively.
David Stacy Reverse Mortgage Specialist
Myrtle Beach, SC 29577
(843) 491-1436
https://www.reverse-info.com
We serve all of Horry County including: North Myrtle Beach, Carolina Forest, Socastee, Forestbrook, Conway, Surfside Beach, Little River, Myrtle Beach, Forestbrook
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