Can I cancel a reverse mortgage if I unexpectedly come into some money?
April 29, 2010 by
Filed under reverse mortgage
Let’s say I’m 3 years into it, and poof, a bunch of money lands in my lap and I no longer want or need the reverse mortgage. Can I buy my own house back?
Read your contract
No idea. Never had that “problem” but, if I did, I’d look into paying off a huge chunk of it ahead of time. That would be awesome.
Yes, you should be able to. Hopefully there are no penalties.
Sure, but you sill will have paid a huge amount in fees.
As in borrowed $100K, owe back $130K.
First off with a Home Equity Conversion Mortgage (HECM) which is the Govt. Regulated and Insured reverse mortgage (accounts for over 90% of the reverse mortgages in the market today) you never give up ownership of your home , you will always maintain ownership and title. That’s Federal Law. Also with a HECM there are NO PREPAYMENT PENALTIES……So, you come into a windfall, you will owe the bank the money you borrowed plus any interest and fees that accumulated, pay them what is owed and they remove the lien……Just like a conventional mortgage….when you pay the lender back…they remove the lien
Be Wary of Sales Pitches
Some sellers may offer you goods or services, like home improvement services, and then suggest that a reverse mortgage would be an easy way to pay for them. If you decide you need what’s being offered, shop around before deciding on any particular seller. Keep in mind that the total cost of the product or service is the price the seller quotes plus the costs – and fees – tied to getting the reverse mortgage.
Some who offer reverse mortgages may pressure you to buy other financial products, like an annuity or long term care insurance. Resist that pressure. You don’t have to buy any products or services to get a reverse mortgage (except to maintain the adequate homeowners or hazard insurance that HUD and other lenders require). In fact, in some situations, it’s illegal to require you to buy other products to get a reverse mortgage.
The bottom line: If you don’t understand the cost or features of a reverse mortgage or any other product offered to you – or if there is pressure or urgency to complete the deal – walk away and take your business elsewhere. Consider seeking the advice of a family member, friend, or someone else you trust.
Your Right to Cancel
With most reverse mortgages, you have at least three business days after closing to cancel the deal for any reason, without penalty. To cancel, you must notify the lender in writing. Send your letter by certified mail, and ask for a return receipt. That will allow you to document what the lender received and when. Keep copies of your correspondence and any enclosures. After you cancel, the lender has 20 days to return any money you’ve paid up to then for the financing.
Reporting Possible Fraud
If you suspect that someone involved in the transaction may be violating the law, let the counselor, lender, or loan servicer know. Then, file a complaint with:
* the Federal Trade Commission (FTC). You can do that online at ftc.gov or by phone at 1-877-FTC-HELP (1-877-382-4357).
* your state Attorney General’s office or state banking regulatory agency.
Whether a reverse mortgage is right for you is a big question. Consider all your options. You may qualify for less costly alternatives. The following organizations have more information:
Reverse mortgages may seem like the perfect financial solution for some aging ….. You may qualify to cancel private mortgage insurance and save hundreds, …. insurance can help you keep your home if you’re unexpectedly unemployed. … If not, put that money into an emergency savings account to help you weather …