13 min read
Fannie Mae Asset Depletion Mortgage- Everything You Need to Know
Getting a mortgage can be difficult if you do not have a steady source of income. Maybe you’re retired, self-employed,...
My decision to look into a reverse mortgage has really taken a lot of turns. It’s a big financial decision, and I wanted to be sure that I evaluated my options thoroughly. One question of mine that came up early in my research was “who owns the house: the bank or me?”.
The answer is that I would own my home. Let’s review why that’s the case…
First, a reverse mortgage is loan. If you’d like to read some of the basics I’ve learned about the reverse mortgage, check out this blog post [link to post #1 What is a Reverse Mortgage]. But I always like to ground myself with that fact to begin. Since a reverse mortgage is a loan, it does not mean that the home owner transfers ownership in any way to the bank. The equity in your home is yours (or passed to your heirs) with a reverse mortgage.
It might be helpful to think in terms of the traditional “forward” mortgage. Perhaps you have one of these now, or you had one previously. Many are more familiar with this type of mortgage, so let’s use that as a basis for comparison.
A “forward” mortgage is also a loan, and the bank does not own your home with this type of loan either. The key difference between the forward and reverse mortgage is that with a forward mortgage, your debt decreases over time and you gain more equity. With a reverse mortgage, your debt increases over time and you lose equity.
While we are on the subject of equity, it was reassuring to me that the equity in my home with a reverse mortgage would belong to me or my children (heirs in this case). Similarly, if the home is worth less than the amount of my loan, the bank cannot go after my children to repay the difference. I learned this is the case because a reverse mortgage is a non-recourse loan. You can read more about this term, and how it applies to reverse mortgages here.
When the reverse mortgage become due and payable at the time of my passing, my children have a few options:
I wanted to understand all the aspects of a reverse mortgage to determine if it’s the right decision for me. I hope that by sharing what I’ve learned, this can help you too, even if we don’t make the same decision. On the topic of home ownership, whether you have a traditional forward mortgage or reverse mortgage, you own the home.
Jan 12, 2025by Jason Nichols
Getting a mortgage can be difficult if you do not have a steady source of income. Maybe you’re retired, self-employed,...
Jan 7, 2025by Jason Nichols
With every passing day, home values are continuously rising in high-cost areas like California. Despite this, many...
Dec 13, 2024by Jason Nichols
A reverse mortgage is an excellent option for any elderly homeowner. However, if the elderly dies without paying the...