Reverse mortgages can be very useful financial tools in the right situation. A reverse mortgage lets a borrower get money for the equity of their home while still living in it. Generally taken on by the elderly, the reverse mortgage ensures that the individual has both cash and a place to live. When the borrower passes on, the reverse mortgage company gets the home. But one of the common fears of a borrower is that there may be no way to reverse the mortgage if something changes.
Using the Right of Rescission
The Right of Rescission entitles an individual to reverse a reverse mortgage within three business days. If you decide you don't want a reverse mortgage even after signing the paperwork, you'll be able to get out of it. This is only what you are guaranteed to have. Some reverse mortgage companies may have longer and more favorable cooling off periods. The 3-day right of rescission does not require that you pay any of the costs associated with the reverse mortgage, but if you change your mind at a later date there could be some fines and penalties.
Repaying the Loan Balance in Cash
A reverse mortgage can almost always be reversed by paying the loan balance in cash provided that the loan has not been entirely completed. That means that the original borrower is still alive and still living in the property. If the original borrower has actually moved out of the property, it becomes a little more complicated; the borrower may actually have to negotiate with the current occupants or owners of the home.
Re-Purchasing the Home
Of course, not everyone is able to pay a loan balance off in cash. Though it may seem a little crazy, a reverse mortgage is often best reversed with a mortgage. It's possible to pay off a reverse mortgage by taking out an actual mortgage on the property and using this to pay off the reverse mortgage loan. A reverse mortgage operates just as a loan against the property, so this is possible. Naturally, if the reverse mortgage was a substantial sum that has been fully paid out, this could be quite expensive.
A borrower may have their financial situation change or may simply want to give their family home to their children. In this situation, it is more than possible to get out of a reverse mortgage loan using the above tactics. For more information, talk to a professional like Retirement Funding Solutions - Reverse Mortgages.Share