When a borrower with a reverse mortgage transitions to a nursing home or assisted living facility, several options come into play:
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Temporary Absence: If the move is temporary, such as for rehabilitation or medical treatment, the borrower can generally continue to reside in their home without affecting the reverse mortgage. The loan terms remain unchanged, and the borrower maintains ownership of the property.
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Extended Absence: If the move becomes long-term or permanent, the situation requires closer attention. Most reverse mortgages have provisions allowing for extended absences due to health reasons. During this period, the borrower or their authorized representative must provide evidence of the intent to return home.
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Loan Repayment: If the borrower's absence becomes permanent or exceeds the allowable timeframe specified in the loan agreement, the reverse mortgage may enter repayment status. This means the borrower or their estate must repay the loan balance, typically by selling the home. The proceeds from the sale are used to settle the debt, with any remaining funds going to the borrower or their heirs.
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Non-Borrowing Spouse: If the borrower has a non-borrowing spouse who remains in the home, they can generally continue living there without repaying the loan as long as they meet certain requirements, such as maintaining the property and paying property taxes and insurance.
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Consultation with Lender: It's advisable for borrowers and their families to consult with their reverse mortgage lender when considering a move to a nursing home or assisted living facility. Lenders can provide guidance on the specific terms of the loan and outline available options based on individual circumstances.