Generally, a reverse mortgage can help you prevent home foreclosure by providing a home loan based on equity.
As the homeowner, when you enter into a reverse mortgage, you defer home loan payments until certain instances arise such as you move out of the home, sell the home, or pass away.
Understand that entering into a reverse mortgage for any purpose, including preventing home foreclosure, can be tricky to navigate. It’s always best to seek assistance from a real estate attorney who specializes in foreclosures and other related matters before signing any dotted lines.
Who Qualifies for a Reverse Mortgage?
Typically, reverse mortgages are available to people who:
- Are older than 60 years of age, though the exact age can vary depending on factors like the reverse mortgage company and current reverse mortgage laws.
- Use the property as a main residence, i.e. it’s not a “summer home.”
- Either own the home absolutely or have considerable equity in the home.
As mentioned above, usually the home loan becomes due when the homeowner:
- Moves out of the home permanently. For example, the homeowner might enter a nursing home.
- Sells the home.
- Passes away.
- Can no longer meet other financial requirements associated with reverse mortgages (see “The Downsides of a Reverse Mortgage,” below).
Before applying for a reverse mortgage, make sure you understand and are prepared to meet every requirement. As with most real estate transactions, reverse mortgages are legal transactions and you will benefit greatly from the assistance of a skilled real estate lawyer who specializes in foreclosure situations.
The Downsides of a Reverse Mortgage
Reverse mortgages are not a perfect solution and do have some downsides.
For example, although a reverse mortgage potentially can help you avoid foreclosure, it won’t let you off the financial hook completely.
For instance, even after you’ve entered into a reverse mortgage, you still could be responsible for:
- Mortgage insurance.
- Insurance premiums.
- All property taxes associated with the home.
- Any related homeowner’s association fees.
- The cost to maintain your home.
Again, you no longer have to make monthly payments to your mortgage company once you enter into a reverse mortgage, but you’ll still have other financial responsibilities, such as those listed above.
Also, once you enter into a reverse mortgage, you can’t just leave your home to any heirs once you pass away. Generally, if any of your heirs wish to keep the home, they must refinance it with the reverse mortgage company—another point at which real estate attorneys can be helpful.
Also Read : Tips for Hiring a Foreclosure Attorney
Before You Choose a Reverse Mortgage
Before choosing a reverse mortgage to avoid foreclosure, seek legal counsel. While a reverse mortgage is a viable option for some homeowners, some homeowners can take advantage of other, more beneficial alternatives.
The experienced West Palm Beach foreclosure lawyers at Law Office of Kelley & Fulton, P.L. can help you determine whether a reverse mortgage is the best option for your situation, as well as help you navigate the reverse mortgage process each step of the way. Contact us today at 561-491-1200 to get started.