Quote:
Originally Posted by zcaveman
Is the reverse mortgage note a personal opinion or an educated one based on fact?
I know a house where the owner passed away. She had a reverse mortgage. The bank immediately turned off the water, gas and electric so there is no temperature control in the house so I assume it is all going to pot. The lawn is being mowed but since there is no water there is no irrigation and the grass is dying.
Please explain.
Z
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When you take out a reverse mortgage the lender gives you somewhere between 45-65% of the value of the equity in your home. The amount varies state to state. You make NO payments of any kind while you live in the home and use the money that you have been advanced.
After you pass and your estate is in probate the lender has a secured claim on the property. The amount due is the amount advanced plus interest for the amount of time you had the money. One of the reasons they will only give you 45-65% of the equity is that they are hedging their bets that the property will not decrease in value because they only get one bite at the apple following your death.
So for the lender to be made whole following your death, that home has to be in good shape because selling that home is how they get back the money advanced to you and the interest owed.