The bottom line: There will be enough time for your heirs to decide if they want to keep the property or sell it, says Phil Crescenzo Jr., vice president of the southeast division of Nation One Mortgage Corporation.
In some cases, such as with a reverse mortgage, the balance is due after a person dies, and their heirs receive a payable notice from the lender, according to the Consumer Financial Protection Bureau. The heirs then must decide if they want to sell the house or turn it over to the lender to satisfy the debt.
If you’ve got cold feet and want to get rid of the loan, talk to your lender to see if there are any prepayment penalties. Some lenders will charge penalties if you pay off a loan within the first three to five years of the repayment plan, according to Citizens Bank, and those penalties can be up to 2% of your loan balance. So beware of the risks if you choose this path.
In any case, Crescenzo says your decision to take on a second mortgage was a good move. You are tapping into your home equity to increase your cash flow now and “allowing a plan for the future that is clearly defined.”
