By Admin on Aug 26, 2010 in Financial Services
say my mom gets a reverse mortgage…can she move? Say the money she obtains from the reverse mortgage she wants to use on buying another home? Would she be allowed to do that…or is it till death do us part?
i was just thinking that in this economy…and not knowing how long it would take to sell her house (which would be the only way we could afford to buy a house) thought this could be an easy way out…instead of having to wait until it sells to recieve money.
My mom owns her house out right and would like to sell it and use the money to purchase an In-law capable home with me and my family.
It is possible to move out of a home that has a reverse mortgage on it. But, first know that the loan agreement will generally state that the borrower intends to occupy the house for a period of at least one year. And most mortgage lenders will not provide cash to buy another home unless they know you do not intend to occupy it. Another words you are cashing out of a house to rent or sell that same house and that is not the business the mortgage lender is in.
As for moving, a reverse mortgage states that the loan is due when the borrower dies, sells the house or no longer occipies the home as their principal residence.
If your mom cashs out with a reverse mortgage to buy an investment property she intends to rent out, nothing stops her from doing that. If she sells the house with the reverse mortgage later she just pays off the loan. People don’t necessarily drop dead in the house they get a reverse mortgage on.
But, reverse mortgage are expensive. High fees. This makes the loan expensive if is not held for a fairly long period of time. To take out a reverse mortgage and then pay it off quickly is costly, very costly.
Russell S | Aug 26, 2010 | Reply
The can you move is nope. Part of the requirements are to stay. It would maybe be better to take a second mortgage and put the house up for sale. Then she has the cash to live on until she can move and hopefully enough to make the payment or buy outright on the new place. Sounds like she isn’t quite ready for the "last house" yet! Good luck…
helprhome | Aug 26, 2010 | Reply