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Before getting a reverse mortgage, seniors should take advantage of
all the reverse mortgage information available to them. One subject
commonly missed by seniors seeking reverse mortgage information is the
topic of repayment. While it is true that seniors can defer repayment
until they die or sell their home, the loan will eventually become due.
When this time comes, both borrowers and their heirs should know how to
handle this important step in the loan process.
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Can Seniors Sell Their Home After Getting a Reverse Mortgage?
When it comes to selling one's home after taking a reverse mortgage, many seniors find much of the available reverse mortgage information confusing. The fact is seniors can choose to sell their homes at any time, but they should be aware that doing so will make their loan become due. To get the most from the loan, borrowers should remain in their homes for at least a few years after getting their loan. Seniors who want to move in the near future might benefit more from the HECM for Purchase program, which allows seniors to purchase a home with a reverse mortgage.
Reverse Mortgage Information: How a Borrower's Estate Is Handled After Their Passing
While gathering information, many seniors are also interested in how their loan will be paid off upon their death. Reverse mortgages become due once all borrowers named on the loan die. If there are two borrowers, both individuals must pass away before their lender can require repayment.
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Since the borrowers would not be in a position to repay the loan themselves, the responsibility would be handed down to their heirs. In this case, the borrowers' heirs would have three main choices: sign the deed over to the bank, sell the home, or refinance the loan. If the balance of the loan exceeds the home value, heirs could avoid the responsibility of selling the home by signing the residence over to the lender.
If the home is worth more than the loan balance, heirs would benefit more from selling the home themselves. As long as the individuals make a good effort to sell the home, the lender should give them 12 months to find a buyer. Once the home is sold, the lender will be repaid, and the borrowers' heirs will keep any remaining funds. It is, however, important to understand that the lender will expect the home to be sold for its appraised value. If the selling price is much lower than the appraised value, the lender might require additional payment. This keeps people from taking advantage of lenders by selling homes to family or friends at much discounted prices.
