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Will we or our children be responsible for any shortfall if we leave the home with a reverse mortgage?

By Jerry R. on 01.02.2019

Hello Jerry,

I want to clarify some key points about reverse mortgages for you. A reverse mortgage is a non-recourse loan, meaning the lender's sole security is your property itself. They cannot pursue any other assets for repayment. However, it's important to be aware of potential additional obligations beyond the reverse mortgage.

Before making any decisions, consider the following steps if you're thinking about leaving your home:

Consult a Real Estate Agent: Get in touch with a local real estate agent to determine if there's any equity in your home. Ensuring you're not walking away from any entitled benefits is crucial. If you can sell the house and retain some funds, it's often the best choice.

Contact the Servicer: If selling the home isn't an option, reach out to your loan servicer. Inform them of your need to move and inquire about incentives for a Deed In Lieu of Foreclosure. This can be an alternative to the lengthy foreclosure process. In some cases, HUD may authorize a "cash for keys" program, where you could receive a payment in return for transferring the property back to the lender. While the amount may not be substantial, it can help cover some expenses and eliminate potential future liabilities tied to the property.

Remember, keeping the property in your name makes you or your estate potentially liable for any issues that may arise on the property. Transferring it back to the lender can release you from this responsibility, ensuring a smoother transition for all parties involved.

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