What are the Reverse Mortgage Occupancy Requirements?

Borrowers Must Use Their Home as a Primary Residence in Order to Maintain Their Reverse Mortgage

If you want to get a reverse mortgage, you’ll need to maintain your home as a primary residence as long as you want to keep the reverse mortgage in place. Specifically, most reverse mortgage terms stipulate that a borrower must spend the majority of the year in their home (i.e. 6 months or more). In addition, borrowers cannot spend more than 1 2 months away from the home at any one time. For example, if a borrower needed to temporarily move into a rehab facility to deal with an injury or illness, they could not stay there for more than a year if they wanted to maintain the reverse mortgage.

In addition to spending at least 6 months a year at their home, borrowers usually need to receive their mail at the home and use the address for banking and other purposes as not to raise any red flags for their lender.

What Happens After a Borrower Has Been Absent For More Than 12 Months?

If a reverse mortgage borrower has been away from their home for at least 12 months, a lender can theoretically begin actions to foreclose on the home or force a home sale. This can be a big concern if there are non-borrowers, such as children, siblings, or a younger spouse living in the home. In reality, however, things rarely happen that swiftly, as it can often take up to 24 months for a lender to complete a home foreclosure, at least in some states. This is why, if the primary borrower has moved out, some lenders will give the borrower’s family a 12-month grace period in order to sell the property, refinance the loan, or make other appropriate arrangements.

The key here, however, is communication. If a lender finds out by accident that a borrower has not been living in their home for a year or more, they are more likely to attempt to force a sale or foreclose as quickly as possible. In contrast, if a borrower’s family stays in regular contact with a reverse mortgage lender, and sees that they are making good-faith efforts to repay the reverse mortgage, they are more likely to be lenient and give them additional time to do so.

Are Their Limits to Who Can Live in a Property With a Reverse Mortgage?

While it’s necessary that the borrower lives on the property for the majority of the year in order to keep a reverse mortgage in place, there are very few (if any) limits to who can live on the property. It’s quite common for other family members to live with the primary borrower, and it’s also common for the borrower to rent out one or more rooms in their home in order to generate supplementary income.


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