My aunt, who lives in Las Vegas, has a reverse mortgage that she took out in 2006, when her home was valued at more than $250,000. The home is now worth just $85,000. If she dies while the home’s value is still so low, can the bank take money from her estate to cover its loss? --B.O., Yorba Linda, Cal.
If your aunt’s reverse mortgage is a home equity conversion mortgage, as most of them are, she doesn’t have to worry. "HECMs are nonrecourse loans, meaning that the borrower will never owe more than the value of the house when the loan is due, which is either when the owner moves out, sells or passes on," says Peter Bell, CEO of the National Reverse Mortgage Lenders Association. The Federal Housing Administration reimburses the lender for the difference between the home’s value and the cost of the loan, which is why borrowers have to buy mortgage insurance.
Check the loan documents or second deed to verify that it is a non-recourse loan. For more information on reverse mortgages, go to www.hud.gov.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Quiz: How Much Do You Know About Taxes on Social Security Benefits?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
Are You Ready for 65? The Medicare Initial Enrollment Period QuizQuiz Turning 65 soon? Test your basic knowledge of Medicare's Initial Enrollment Period (IEP) rules in our quick quiz.
-
3 Ways to Stretch the 2026 Social Security COLA For Your BudgetThree steps retirees can take to stretch the Social Security COLA to fit their budgets.
-
Update: Biden Administration Extends Eviction and Foreclosure Moratorium, AgainCoronavirus and Your Money Getting to work right after the inauguration ceremony was over, President Joe Biden included assistance for renters and homeowners among a slew of executive orders to help struggling Americans.
-
10 Things Every Home Buyer Should Doreal estate Buying a home may be one of the biggest purchases you will ever make. The more you know about the process, the more money you'll save.
-
Unconventional Mortgage Loans Are Making a Comebackloans Lenders are making it easier to get loans, but a repeat of the housing crisis isn’t in the cards.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driver
insurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
