Many Americans who are sixty-two or older are choosing to create an estate plan by taking out a reverse mortgage. A reverse mortgage may seem like a blessing to homeowners because they allow them to borrow against the value of their home to pay for their retirement or medical bills. Under these terms, the homeowner is not required to pay back the loan until they move out of the family home or pass away. Unfortunately, this means that the homeowner's heirs may become responsible for the debt when they begin the succession/probate procedure.
The federal government allows heirs the right to negotiate the settlement of the loan for a certain percentage of the actual loan amount. A federal insurance fund provided by the U. S. Department of Housing and Urban Development (HUD) and the Federal Housing Administration (FHA) can make up the difference. Reverse mortgage borrowers pay into the fund each month. However, reverse mortgage companies may demand full payment, which could mean that heirs may be forced foreclose. Foreclosure could result in the loss of your family home.
It is important to consider the effects a reverse mortgage may have on your loved ones when you pass. If you find yourself in the position of taking out a reverse mortgage, be sure to know your legal rights. You may want to consult with an estate-planning lawyer to weigh all of your options. If you are in the position of dealing with your loved one's succession/probate and have encountered the issue of a reverse mortgage, a Baton Rouge estate planning attorney can assist you in managing your succession/probate and help you understand the legalities of a reverse mortgage.