What Happens At The End Of Reveres Mortgages?
Mortgage
Okay, my parents have a reveres mortgage on their house, they are getting up in age and want to leave the house to their grand daughter. she is 2yrs old. Is she allowed to stay in the house until she is 18yrs then pay back the loan? Or will her mom and dad be responsible to pay right away? Or will they just take the house at the end? What will happen? This is in California Thank you
Tags: California, loan, Mortgages, Reveres Mortgages, reverse mortgages
In most cases, upon the death of both of your parents the house is available to a beneficiary for the value of the loan (the amount your parents have received to that date plus interest).
What you would like to have happen won’t.
The estate MUST settle the loan or the house will be sold/foreclosed on. Any excess money (depending on the loan, this is unlikely) would be distributed.
You cannot expect to have the granddaughter get the house without the loan being paid back. Since a 2 year old cannot sign a contract, no bank will lend her the money to pay off the loan.
Check out the documents on the reverse mortgage.
Generally these require the loan to be paid off upon death of both owners. So for your daughter to inherit it, the house would have to have the mortgage paid off from your parents estate, from life insurance, other assets, etc. Otherwise it is sold, or refinanced.