The 5 Tips About The Reverse Mortgage Pay Off, How To Do It
. The payments are tax free. The lender will not ask any income nor credit score information, so the home equity is the only source of funds, which can be used to the backpayment. But what actually happens, and who will do and what?
1. The First Actions.
Whether you are the borrower or a heir, you have to do the same actions. First you have to contact the reverse mortgage lender and to ask no further draws against the equity. Then you have to ask the payoff statement including the month, when the loan will be paid off. If you will sell the home a title company closing agent or an attorney handles the paperwork.
The payoff statement is the key information. It includes all items from the whole running time of the reverse loan. The capital, the accumulated interests and all costs and fees. The total sum will be deducted from the selling price of the home. If the home selling price fails to cover the whole sum, the missing part will be paid from the obligatory mortgage insurance, which you have taken, when you singned the loan.
2. 34 Days Paid Off Interest.
The lender will add 34 days interest to the statement, which covers the time, if the statement is posted after the first day of the month. The reverse mortgage is a government loan and insured by the Federal Housing Authority. They post the statements always on the first banking day of the month.
3. How You Should Handle The Home Insurance?
You should contact the home insurance agent immediately, when you want to pay off the loan and when the ownership will be changed. You should ask, whether you can get back the part of the insurances, which you have paid in advance.
4. Your Lien Releases.
If the closing agent will handle the mortgage paperwork you can pay a small fee. Actually two release are required. One for the lnder and one for the FHA concerning the mortgage insurance premium. If you want to handle the payoff by yourself, you can pay the sum to the lender using wire transfer or cashier check.
5. About Mortgage Insurance Premiums.
You can ask from the title company agent, whether you have to fill the form to get the rebate of the mortgage insurance premiums. And dont forget to ask about the fees, which were set aside.
It is important to remember, that a borrower of the reverse mortgage loan will never pay the loan capital, interests and fees from his or her other assets. If the selling price fails to cover the whole sum, the rest comes from the mortgage insurance. This is all what is needed, so the borrower or the heirs do not have to pay for the reverse loan from their other assets, the home selling price is the only source of money.
It is wise to let the expert to handle the paperwork. If a senior is not sure what to do, the reverse mortgage counselor can help.
by: Juhani Tontti
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2024-2-20 11:25
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