Ask Terry Questions Reverse Mortgage balance growing

Reverse Mortgage balance growing

By Terry Savage on April 26, 2015 | Housing / Real Estate

I have had a reverse mortgage for the past 8 years. Since that time the real estate value of my condominium has markedly decreased to the point where the amount I “owe” on the monthly reverse mortgage statement is more than the condominium is worth and that amount increases each month. What are my financial obligations (I am on a fixed income) if I were to sell the condo for less than that amount? My concern is that I do not have any financial resources to even think about paying any discrepancy between what I “owe” and what the property would sell for. What are the consequences and/or options for me?

Terry Says:  Congratulations — you have won the “reverse mortgage” lottery of life!   The good news is that you can NEVER owe more than the condo is worth at your death, or when you move out.  Yes, it’s true that if you sell you won’t get any money.  But, you won’t owe any money either.  So try to stay in the condo as long as you can.

If you’re still getting a monthly check (as opposed to having taken a lump sum) then every check puts the lender farther behind the 8 ball! That’s the risk that reverse mortgage lenders take — and they are insured for that risk and you paid for that insurance when you took out the RM.  And if you did take a lump sum that’s okay — same thing, you can’t owe more than the condo is sold for!  So enjoy.  (My Dad is living in the same situation, and he worries too, about that “huge balance” and I tell him (age age 93) to keep on enjoying his condo.  No one can force him out — or force his estate to pay anything back to the lender.



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