Who owns my home with a Reverse Mortgage? The quick answer is, you do.
There is a false conception that if you do a Reverse Mortgage you are giving your home to the bank and the bank is letting you live in it for the rest of your life. Fortunately, this is not true.
A Reverse Mortgage functions almost exactly the same as a standard conventional mortgage. However it has a few key differences.
These are the basic similarities and differences of a Reverse Mortgage vs. a Conventional Mortgage:
- With the county, you are listed as the owner on title. Therefore, you can sell or refinance at any time.
- You are borrowing money from the bank to purchase or refinance the home.
- The money you borrow must be repaid. Usually, this is done after the homeowner passes away and the home is sold. The loan is then repaid from the equity in the home.
- Any money you borrow you are charged interest on.
The only real difference with a Reverse Mortgage is that payments are optional. More importantly, you could go the rest of your life and not make another payment on the mortgage. As long as you live in the home and pay your basic property expenses such as taxes and insurance. Additionally, your loan balance is charged interest every month like a conventional mortgage. However, that interest is just added to the balance of the mortgage so you don’t have a mandatory payment.
In short, with a Reverse Mortgage, you own your home. Then the bank allows you to use the equity in your home to live better but you are always free to sell or refinance the home. Thus when you pass away your heirs will still inherit the home and any remaining Equity.
Please call us if you or someone you love would like to know more about a HECM Reverse Mortgage.