It may be possible to remain in your home by obtaining a reverse mortgage to pay off your existing mortgage debt and stop foreclosure. FHA’s Home Equity Conversion Mortgage (HECM) is a common reverse-mortgage option. A reverse mortgage pays you, either in a lump sum — usually subject to certain
limits — in monthly installments, or a combination of both. The amount for which you qualify will depend on how much equity you have in your house. If that amount doesn’t cover the full amount you owe on your existing mortgage, you might be able to negotiate with the existing lender for a reduced lump sum payment. Reverse mortgages offer some appealing advantages. If you have sufficient equity in your home and are approved for a reverse mortgage, you will no longer have to make mortgage payments, and you might receive enough money to pay other debts. The new lender is getting your house, so you probably won’t be subject to the income and credit requirements needed for other kinds of loans. Be aware, however, that a reverse mortgage can have its downside. If you decide to sell your house, you will have to pay off the reverse mortgage in full. Similarly, if you permanently move out for any reason — perhaps because of age or disability — the full loan will become due. If you are responsible under terms of your reverse mortgage to pay taxes and insurance on the property, you could be found to be in default of the reverse mortgage agreement. When you die, the reverse-mortgage lender will take possession of the property, unless you or your heirs make some provision to pay off the reverse mortgage in full.
49
Powered by FlippingBook