Why can’t a reverse-mortgage foreclosed house be sold for less than appraised value? Find answers to this and many other questions on Trulia Voices, a community for you to find and share local information. Get answers, and share your insights and experience.
Most reverse mortgages today are insured by the Federal Housing Administration (FHA), as part of its Home equity conversion mortgage (HECM) program. An FHA-insured HECM loan is a non-recourse loan . This means that when your home is sold to repay the loan, neither you nor your family will be required to pay more than the sales price of the home.
Home Equity Conversion Mortgage. For example, if the appraised value is $300,000 with a $100,000 HECM credit line limit, the maximum lien on the home is $100,000. If you sold the home for $300,000, proceeds would be $200,000 after the HECM lien is satisfied (not including other sales costs).
The amount that’s due to the lender is the lesser of the reverse mortgage loan balance or 95% of the appraised market value of the home. Say the appraiser determines the home is worth $200,000 and the loan balance is $100,000. To keep the house, the heirs need to pay the loan balance of $100,000.
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4 steps to selling a house with a reverse mortgage. The steps to selling a house with a reverse mortgage are really no different than if you were selling a home with a traditional mortgage. Step 1: Trigger a maturity event. Since selling the home is a maturity event, that essentially takes care of step one.
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Professor Chris Mayer has a lesson for homeowners: Reverse mortgages, which let older americans tap their home equity without selling or moving, aren’t as risky as some say. In an online video, he.
A reverse mortgage is a loan for senior homeowners that allows borrowers to access a portion of the home’s equity and uses the home as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. 1 At that time, the estate has approximately 6 months to repay the balance of the reverse mortgage or sell the.