What You Need To Know About Non-Recourse Reverse Mortgage

A reverse mortgage loan is a non recourse loan and it is one of the features that many senior home borrowers do not understand. Many people think that this term refers to something bad and tends to bring the feeling of uneasiness to the homeowners at first when it’s being explained. But, a non-recourse loan offer security to the borrower about the collateral.

A reverse mortgage will require the withdrawal of the home equity from the primary home where the senior borrower is living. Because the collateral is placed on the house, it must be the sole source of dissolution and repayment of the mortgage contract.

The reverse mortgage loan will convert into cash a part of the home equity according to its current fair market value. The loan can be released as a lump sum or monthly payments, based on the borrower’s preferences. Even when the loan allotment period has ended already, the borrower has no responsibility to repay the loan and can continue living in the house. But the longer the senior borrower stays in the property, the higher the repayment dues will accrue.

The repayment would start when the senior borrower along with his family makes a decision to leave the house and sell it. If the borrower dies, the heirs will inherit the mortgage contract and they will be given 12 months to live in the property, wherein they can determine if they will still continue with the financial benefits of the loan or sell their home. The proceeds of the sale will be used to settle the full mortgage loan and the remaining amount will go to the primary homeowner or his estate.

When this happens, it will provide security on the part of the borrower that there will be on other property that will be involved when it is time to repay the reverse mortgage loan. There are instances when the borrower has outlived is expected lifespan, especially with the modern medicine these days as well as the physical activities made for seniors.

As that happens, the obligation for the loan will increase dramatically and may even exceed the value of the property. Real estate tend to increase in value. However, there are cases when the value also decreases. This takes place when the house is not well maintained and taxes are not paid regularly. Minor home repairs like repainting and plumbing when not attended to right away can result to bigger issues.

If the loan obligation goes beyond the home equity, the lender can’t force the homeowner to sell his other properties, regardless if it’s tangible or real, to cover the repayment. The lender will assume the loss in the event that the value goes down; on the flip side, the borrower will assume the loss if the property value goes up.

A non-recourse loan will make sure that your reverse mortgage Columbia won’t go beyond the home’s value. Although it may be worth more than the house, but when it comes to repayment, nothing should be used to deal with the obligation or the lender will have no other recourse to get repayment but through the collateral alone.

Call Reverse Morgage Specialist for a comprehensive discussion about reverse mortgages.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/