Answer. Yes, it’s possible to offer your parents a reverse mortgage. In fact, doing so offers many benefits in addition to keeping the money that would be spent on interest within the family.

Can you walk away from a reverse mortgage?

With the non-recourse aspect of reverse mortgages, the borrowers or their estate do not have to pay back more than the value of the home, even if the loan balance is higher. In these circumstances, the borrower (or estate) can grant a “deed in lieu” and walk away from the obligation of selling the home.

Can a parent get a reverse mortgage for their home?

VA 15 Yr. Reverse mortgages, also known as Home Equity Conversion Mortgages (HECM), can be a great way for your parents to tap into their home’s equity. These federally-insured loans can provide homeowners with monthly cash payments, based on the equity they’ve built up.

Who is responsible for paying off a reverse mortgage when a parent dies?

Once the home is sold, your parents move out, or pass away and there is no surviving spouse or co-signer, repayment in full is necessary. Should the home be left to the homeowner’s children, the heirs are responsible for the full loan balance. This is regardless of whether or not the heirs intend to occupy the property.

What happens if you default on a reverse mortgage?

It is possible to default on a reverse mortgage by breaking one of the three loan maturity rules outlined in your loan agreement. To keep your reverse mortgage in good standing you must maintain property taxes, homeowner’s insurance, and occupy your home as your primary residence.

What happens when I Sell my Home with a reverse mortgage?

With a reverse mortgage loan, if the balance is more than the home is worth, your heirs don’t have to pay the difference. If your heirs sell the home, the lender will take the proceeds from the sale as payment on the loan, and the FHA insurance will cover any remaining loan balance.