According to the study, seniors who initially withdrew US$10,000 with a reverse mortgage reduced their credit card debt by US$2,364 in the first year after borrowing. Additional loans resulted in a minimum repayment of the additional debt: for every additional $10,000 withdrawn in advance, seniors paid an additional $166, and for every additional monthly cash flow generated by the reverse mortgage, seniors paid an additional $45 for the entire year. Foreclosures and late payments are also rarer, at least for three years after the reverse mortgage closes. Seniors who experienced a credit shock in the two years prior to the conclusion of the reverse mortgage benefited the most. (The researchers defined a “credit shock” as a drop in creditworthiness of 25 points or more.) These seniors may not have qualified for another type of home loan because of their credit. Qualification for a reverse mortgage does not depend on the creditworthiness of a senior. Non-HECM reverse mortgages are available from a large number of credit institutions. The main advantage of these reverse mortgages is that they offer credits in amounts above the hemc limit. One of the disadvantages of non-HECM credits is that they are not federally insured and can be significantly more expensive than HECM loans. An Atlanta-based consulting firm has conducted a new study highlighting the value of reverse mortgages as a way to pay off debt and reduce monthly expenses. Q: How long will my estate have to pay off the reverse mortgage as soon as it is due and payable? A: The reverse mortgage must be paid in full once it is due and payable. You and/or your estate should work closely with your credit service provider to ensure that your reverse mortgage is paid fully and on time. If your credit provider does not arrange to pay the reverse mortgage, your credit service provider may enforce it between 30 days and 6 months from the date your loan is due and payable.
If you or your estate are actively working either to refinance your property or sell your property to satisfy your reverse mortgage, a foreclosure can be avoided.
