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Reliable Source of Income
Tax Free
No Monthly Mortgage Repayments
Money can be used for any purpose
Monthly
Line of Credit
Lump Sum
Mix and Match
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How a reverse mortgage is repaid depends upon the circumstances under which the loan ends:
- if you sell and move, you would most likely pay back the loan from the money you get from selling your home. But you could pay it back from other funds if you had them
- If the loan ends due to the death of the last surviving borrower, the loan must be repaid before the home’s title can be transferred to the borrower’s heirs. The heirs may repay the loan by selling the home, using other funds from the borrower’s estate, using their own funds, or by taking out a new loan forward mortgage against the home.
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Not all reverse mortgage borrower ends up living in their homes for the rest of
their lives. Some folks who originally planned to live a particular house forever
subsequently change their minds. Other develops health problems that force them
to move. So it makes sense to plan for the possibility that you may sell and move
some day. How much equity would be left if you did?
If at the end of the loan, your loan balance is less than the value of your home
( or your net sale proceeds if you sell ), then you or your heirs get to keep the
difference. The lender doesn’t get the house. The lender gets paid the amount you
owe, and your heirs keep the rest of the house’s proceeds of sale.
If you take the loan as a credit line account, be sure to withdraw all your remaining
available credit before the loan ends. You have access to the money sooner that
way, and the amount could be more than otherwise may be left. For example, a growing
credit line could become greater than the left-over equity if the home’s value decreases.
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