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How moving to nursing home affects reverse mortgage
Mortgage101.com, August 28th, 2006
DEAR BOB: My 90-year-old mother-in-law has
recently moved permanently into a nursing home. She has a new reverse
mortgage on her free-and-clear home to pay her living costs. My husband
will inherit her house when she passes on. At that time, we plan to
demolish it and build new. What are the financial ramifications of
renting the house to tenants until she passes away? He is reluctant,
whereas I hate to see a nice house sitting there vacant that can bring
in $2,000 monthly rent. --Elaine H.
DEAR ELAINE: Bad news! Because your mother-in-law permanently moved
out of her principal residence, her reverse mortgage will become due
and fully payable in full after 12 months of her non-occupancy of the
house.
Reverse mortgage lenders periodically check up
on their borrowers to see if they (a) are still alive and (b) are
occupying their primary residence (except for absences less than 12
months).
If the house is rented to a tenant, when the
reverse mortgage lender discovers the owner no longer lives there, the
lender can require the loan balance be paid in full or it will be put
into foreclosure. For more details, read the reverse mortgage documents
and consult a local real estate attorney.
Read more of this article. Learn more about Reverse Mortgages.
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