A recent post on the Zillow Blog lists ten things for consumers to know about reverse mortgages, written by a reverse mortgage director at a Kansas City, Mo.-based bank.
“[Reverse mortgages] are not a wildly inventive financial instrument,” says the blog post, “but rather a loan product designed specifically for older adults.”
The list ranges from simple facts—that borrowers retain the title to their homes and can choose how the proceeds are distributed—to address specialized details about how proceeds are normally tax-free and what happens if homes appreciate or depreciate in value.
“[W]hen you sell the house and the reverse mortgage is paid off, any excess balance is yours or your heirs to keep. A home that appreciates in value just gives you more money in the end,” says the post.
Depreciation shouldn’t be a concern, it continues, as long as borrowers continue to occupy the home as their primary residence, pay the appropriate taxes and insurance, and maintain upkeep.
“Should the home, when you decide to sell or leave it, be worth less than the outstanding loan amount, its sale fulfills the debt in whole; FHA mortgage insurance satisfies any difference.”
The post concludes with information on how to qualify or be eligible for a reverse mortgage.
Check out the list on the Zillow Blog.
Written by Alyssa Gerace