You may have seen television commercials advertising reverse mortgages, telling you about the financial rewards that can come from taking a reverse mortgage on your home. While it can theoretically result in additional money in your pocket, at least in the short term, it’s important not to mistake it for a financial windfall. You should be aware of the perils of a reverse mortgage before you take one out on your home.
A reverse mortgage is a kind of loan taken out against the equity in your home. You can receive monthly installments over the period in which you live in your home or as a lump sum. Its value is based on the value of your home, minus any debt you owe on the property (such as an unpaid mortgage or a lien taken out by a creditor). In theory, this allows you to tap into the equity in your home without having to sell it.
In practice, however, a reverse mortgage is still a loan, and when you die or stop living at that residence, you will be responsible for paying back every last dollar you received, plus interest. Depending on the housing market, it is entirely possible that you will owe more on your reverse mortgage than the home is worth when it comes due. It is therefore possible that you or your family won’t be able to pay back the debt you’ve incurred by selling your home because the amount of the debtmay exceed the value of the home. Worse still, lenders are notorious for suing the family members of the borrower when the borrower dies before paying back the reverse mortgage.
Whether you are a surviving spouse seeking to continue living in your home, or an heir concerned about the burden of selling or refinancing a loved one’s home, Hobson-Williams, P.C. can represent your interests against reverse mortgage lending institutions. If a lender has threatened or commenced foreclosure actions, contact the firm at (718) 210-4744 for a consultation, and learn how the experienced elder law attorneys at Hobson-Williams P.C. can help you keep your home and protect your finances.
