Mortgage Blog

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No Negative Equity Guarantee

May 12, 2023 | Posted by: Tania Kalinich

No Negative Equity Guarantee

You may consider a reverse mortgage to turn your home equity into tax-free cash as part of your retirement solution. But, you might question, “With a reverse mortgage will I owe more than my home is worth?”   

The answer to this is NO.

The CHIP Reverse Mortgage has safeguards built into products to ensure you are not at risk of losing your home or equity.


What is the No Negative Equity Guarantee? 


The No Negative Equity Guarantee* ensures that if you meet your property taxes and mortgage obligations, HomeEquity Bank guarantees that the amount owed on the due date will not exceed the fair market value of your home. If the house depreciates and the mortgage amount due is more than the gross proceeds from the sale of the property, HomeEquity Bank covers the difference between the sale price and the loan amount.

Ultimately, the No Negative Equity Guarantee keeps you and your equity secure in your home. The peace of mind you get from leveraging a reverse mortgage is protected no matter the economic backdrop.


Does a home ever sell for less than the mortgage balance?


This is extremely rare. HomeEquity Bank never lends more than 55% of the home’s value for this reason. Over the past 30+ years, 99% of Reverse Mortgage holders have had equity left in their home; on average, this equity amounts to 60%. Escalating real estate value boosts the equity in the house, reducing the impact of interest charged to the mortgage principal. The homeowner keeps all the equity remaining in the home. That equity depends on the amount borrowed, the value of the house, and the time that has passed since the reverse mortgage was taken out. 


Contact me if you have any questions about The CHIP Reverse Mortgage!


*As long as you keep your property in good maintenance, pay your property taxes and property insurance and your property is not in default. The guarantee excludes administrative expenses and interest that has accumulated after the due date.

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