With a reverse mortgage from Bank of America, you are not required to make monthly reverse mortgage payments as long as you live in your home.
There are some circumstances that will cause the loan to mature and the balance to become due and payable.
The most common are:
- The last remaining borrower sells the home
- The last remaining borrower passes away
- The borrower fails to live in the home for more than 12 consecutive months
Other circumstances that may cause the loan to become due include:
- You transfer the title to another person or entity
- You fail to pay property taxes
- You fail to maintain and/or repair the home
- You fail to keep the home insured
Loan amount owed
When the loan balance becomes due and payable, your home will be re-appraised to determine its value. Based on the appraised value and the outstanding loan balance, two scenarios are possible:
Scenario 1 — You or your heirs decide to sell the home: If the loan balance is less than the appraised home value or sale price, you or your heirs only owe the loan balance. As a result, you or your heirs keep the difference between the sale price and the loan balance, less sales costs.
Consider this example:
When Sandra gets a reverse mortgage from Bank of America, her home is appraised at $300,000, and she is eligible to receive $150,000. After many years, Sandra decides to sell her home. At this time, her home is appraised at $350,000. Based on her withdrawals and accrued interest, the loan balance is $250,000. Sandra sells the home for $350,000 and is only responsible for paying the loan balance of $250,000. She keeps the remaining proceeds of $100,000 (calculated as the sale price of $350,000 minus the current loan balance of $250,000), less sales costs.
Scenario 2 — You or your heirs decide to sell the home: If the loan balance is greater than the appraised home value, you or your heirs will only owe the appraised home value or all proceeds from the sale.
Consider this example:
When Pat gets a reverse mortgage from Bank of America, her home is appraised at $200,000, and she is eligible to receive $100,000. After many years, Pat passes away. At this time, her home is appraised and sold at $215,000. Based on her withdrawals and accrued interest, her loan balance is now $225,000. Pat's heirs sell the home for $215,000 and pay off the loan. Nothing more is due.
Scenario 3 – You or your heirs decide to keep the house If, however, you or your heirs decide to keep the home, whether or not the loan is due and payable, you or your heirs will have to repay the entire amount owed.
Consider this example:
Paying off your loan balance
There are two basic ways you can pay off the loan balance:
- Sell the home and use the proceeds from the sale1
- Use other sources of funding
Other sources of funding may include:
- Checking and savings accounts
- Investment and brokerage funds
- Sale of other real estate assets
- Funds from a new mortgage on the home
You can make reverse mortgage repayments on all or part of the loan balance at any time. There are no pre-payment penalties.
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Your Responsibilities
