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Can I Sell My House If I Have a Reverse Mortgage?

Homeowners with a reverse mortgage may sell homes at any time. A non-recourse loan restricts repayment to the lower of home market value or loan balance.

A reverse mortgage enables homeowners to enjoy retirement without home payments and retain the flexibility to sell homes for a profit. Many features are similar to conventional home loans but significant differences do exist. The most profitable difference is the immediate increase in monthly cash flow without personal liability.

Selling Your Home

A few homeowners feel guilty about living their home while not making payments. This guilt is not justified. The check received each month is not free. It is a loan from an existing line of credit secured by home equity. Lenders love real estate loans because they know homes retain value better than personal property. Lenders extend lines of credit to homeowners as a reward for years of hard work required to build home equity. Homeowners may choose to sell their homes at any time and repay the loan balance. If home value is not adequate to repay the loan, a homeowner may forfeit ownership without personal responsibility. Personal assets are not at risk.

Reverse Mortgage Requirements

Lenders do not check FICO scores or require proof of income when making reverse mortgage loans. These inconveniences are not applicable to non-recourse loans. Lenders do however impose several basic requirements to maintain non-recourse loans in good standing. Homeowners should provide insurance coverage for hazards and natural catastrophes. All property taxes must remain current. Ordinary repairs and maintenance are required. These necessities protect lenders and borrowers equally by maintaining home value.

Loan Limits

Net home value determines the amount of the line of credit. All reverse mortgage lenders appraise property before approving a loan. The maximum line of credit approved depends on the appraisal less all outstanding liens.



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