When a conventional mortgage is taken out, there is always a maturity date. This date designates, if the borrower never defaults, the last payment (including all interest and principal) bringing closure to the loan.
With a HECM reverse mortgage there is a maturity event, that is, a designated event in the borrower’s life which makes the loan then due. Reverse mortgage loans do not require monthly payments which can be quite an advantage for a senior entering into a new phase of life – whether their looking to supplement their income, protect retirement assets and investments, or buy a new home. FHA insured reverse mortgages are offered to those 62 and older based on certain guidelines, such as the home the loan is on must be a primary residence and it must meet HUD’s required guidelines.
Maturity event will be a term the borrower will encounter several times during the application process and required third party counseling. It’s very important piece for both the borrower and loved ones to understand.
Here are some examples of maturity events:
• The borrower, (or last borrower if married) passes away.
• The property for which the reverse mortgage is taken is no longer in the borrower’s primary residence.
• The property is sold out of the borrower’s name
• The borrower moves out of the primary residence for more than twelve consecutive months, such as moving in with family or assisted living for care.
• The borrower defaults on property taxes, homeowners insurance, or other obligations to the home.
Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.