Before getting into the details on reverse mortgage payoffs and how they work, it can be helpful to understand what a reverse mortgage is and why a loved one might get one. The primary reason to get a reverse mortgage is that it allows them access to their home equity to help fund retirement. Traditional banks offer little to no help because the property is typically in the decedent’s name, not the heir seeking financial help.
If and when a reverse mortgage borrower moves out, sells their home, or passes on, the loan becomes due. When the beneficiaries wish to keep the property, they must pay off the loan balance in full within the first six months.
Repaying this loan can be tricky if one doesn’t have the funds readily available. Fortunately, there are reverse mortgage payoff lenders that provide private capital loans to families that may need more than 6 months to sort through the next steps during an already difficult time.
What is a Reverse Mortgage Payoff Loan?
A reverse mortgage payoff is usually required during difficult times. In most cases, it involves a single beneficiary or multiple beneficiaries of an elderly parent’s estate after they pass on. When the executor of the estate begins the process of sorting through paperwork and getting all affairs in order, some may discover a reverse mortgage was taken against the property and that the full repayment of the loan is required within a fairly short time frame. Typically, there is a six-month grace period.
Reverse mortgage payoff loans are private loans used to pay off reverse mortgage loans. These loans come from private equity firms like HCS Equity to provide flexibility for the heir or responsible party to manage the property and assets without being forced to sell them in order to meet the expenses of the estate.
To qualify for a reverse mortgage payoff loan, there must be sufficient equity in the property for the loan to make sense for all parties. Typically, this means we will lend on a property with a loan to value ratio up to 65%.
Reasons For A Reverse Mortgage Payoff Loan
One factor that pushes many toward a reverse mortgage payoff process is the need for more time, beyond the six-month grace period . A family doesn’t want to be forced to make difficult decisions quickly, and under pressure, having to decide if they should sell the property or keep it. There could also be a prolonged probate process or delays in administering and distributing trust.
Another reason for a reverse mortgage payoff is a lack of personal capital within a family to pay back the loan.
Required maintenance on a property before it can sell is another scenario that could take time and additional capital that a reverse mortgage payoff could provide.
They could also want to maintain the tax base and make sure they don’t trigger another property assessment.
Fortunately, a reverse mortgage payoff loan may provide the necessary relief, by providing the family the needed liquidity, time, tax base security, and/or chance to keep the estate within the family.
Reverse Mortgage Payoff Rules
Once it is understood that a reverse mortgage was taken against the property and that payment is due, it can be helpful to understand all the criteria involved in a payoff. HSH.com provides a list of payoff rules which can be useful to anyone having to look into paying off a reverse mortgage.
- Payment in full is required once the home is sold, this is the case if someone moves out or passes on and there is no other cosigner or spouse is around.
- There is a six-month grace period before payment is due in full.
- If there are beneficiaries to the property of a property with a reverse mortgage they will automatically be responsible to pay off the loan in full.
- An heir occupying the property does not postpone the reverse mortgage loan payment.
- If a son, daughter, or set of siblings wishes to keep the property and do not want to sell or give the property to the lender they will need to pay the loan in full.
- Usually one never owes more than what the home is worth but if the value of the home exceeds the balance owed, you can keep the proceeds after selling the home.
In many cases, the family wishes to keep the property but there are many reasons that make paying the reverse mortgage loan back difficult. This can be the catalyst for looking into a reverse mortgage payoff loan.
Reverse Mortgage Payoff Next Steps & Benefits
Reaching out to HCS Equity is the best way to jump-start the process as every situation is unique. HCS Equity likes to keep business authentic and believes a phone call is the best way to kick things off. They understand everyone has a different reason they might be looking into a reverse mortgage payoff and it is not a decision to be taken lightly. They understand that the strict six-month repayment requirement will be one of the main reasons beneficiaries seek help, with the weight of a time crunch on their backs.
The partners at HCS Equity use their own private capital and you will speak to them directly on your first call. With direct access to the primary decision-makers at the firm, a loan can usually be made available in 7-10 days.
Here are some other benefits of taking a reverse mortgage payoff with HCS:
- Competitive rates and terms
- No personal guarantee required
- Interest only payments
- No prepay penalties
- No minimum months of interest
Contact HCS Equity
We are a private equity firm providing beneficiaries, trustees and many others with private loans using our own capital. Here at HCS Equity, we help with reverse mortgage payoffs, featuring competitive rates and terms, interest-only payments, and no prepay penalties or minimum months of interest. Plus, funds are available within seven to 10 business days. To learn more, contact us at 844-394-9300 or schedule a free consultation online.