reverse mortgage basics

Dealing with Outside Debt

If you’re still paying on a forward mortgage or owe other money on your property, this may affect your ability to take out a reverse mortgage, because reverse mortgages are usually considered “first” mortgages and must hold first rights to repayment against your home. How can you resolve this issue?

1. Use savings to pay off the old debt before you get a reverse mortgage.
2. Pay off the old debt with a lump sum advance from your reverse mortgage.
3. Check to see if your forward mortgage lender is willing to be repaid after the reverse mortgage is repaid.

Any of these strategies may work. Be aware: State and local government agencies are usually the only lenders who are willing to take a backseat on repayment or to“subordinate” their loans.