Unless there is some sort of modern medical miracle, you can not outlive a reverse mortgage. The reason for this is because the term of the loan goes until you are 150 years old. However, you can outlive the proceeds from a reverse mortgage, with the exception of one available option with the reverse mortgage.
If you are worried about outliving the funds from the reverse mortgage, there is a way to guarantee income from the reverse mortgage for as long as you live in the home and are meeting all of your obligations.
That option is called the Tenure monthly payment option. The equity you can borrow from your home is converted into monthly payments. You will receive these payments for as long as you live in the home and meeting the terms and conditions of the reverse mortgage.
These payments will continue regardless of the loan balance or home value. Even if the home value goes down or the loan balance exceeds the homes value, you will still receive your monthly payment.
What Happens If You Outlive a Reverse Mortgage?
As already stated, you can’t outlive a reverse mortgage itself.
However, if you spent all the money in the line of credit, or you set up term payments and the term is over, you will have technically outlived the proceeds from the reverse mortgage.
The good news here is that nothing happens. Even though all the money is spent and gone. You get to continue to live in the home. The reverse mortgage does not become due, you do not have to start making payments, you do not have to sell your home. Your would still need to continue to pay your property taxes, homeowners insurance and other property charges.
Can You Outlive Your Equity with a Reverse Mortgage?
Yes, you could outlive the equity in your home with a reverse mortgage. What I mean by that is the loan balance could get to a point where there is no equity left in your home. There are many factors that would impact your equity. These include how long you live, interest rates, how much you borrowed and when, as well as future home values.
The good news is that if the equity in your home runs out, meaning you no longer have any equity in the home, nothing happens. You can continue to live in the home and your only obligation is to continue to pay property taxes, homeowners insurance and other housing expenses; as well as live in it as your primary residence and take care of it.
Even if there was no equity left, you would continue to receive monthly payments with either the tenure or term options. And if you had money available in your line of credit it would still available as well. The amount of equity in your home has no bearing on the funds you had access to when you got the loan initially.
