WHAT HAPPENS IF THE DECEDENT HAS A REVERSE MORTGAGE?

---

With a reverse mortgage, a homeowner—typically an elderly person 62 years of age or above—can turn some of the value in their house into cash. In a reverse mortgage, the lender pays the borrower instead of the borrower making monthly payments to the lender as is the case with a standard mortgage. When the borrower moves out, sells their house, or passes away, the debt is returned.

When a person with a reverse mortgage passes away, there are two options for handling the loan:

Sell  Property:

The most frequent method of repaying a reverse mortgage is to sell the property. The sale revenues are used to repay the debt, and any surplus funds are distributed to the decedent's heirs.

Loan Refinancing:

The decedent's heirs or estate may opt to refinance the reverse mortgage into a standard mortgage or another financial arrangement in order to maintain the residence.

How much time do I have to sell or refinance?

The time frame for selling or refinancing following a borrower's death varies depending on the circumstances and the lender's rules. In most cases, heirs or the estate have a limited amount of time to make decisions and meet loan criteria. It is critical to call the lender as soon as possible to discuss the problem and investigate potential choices.

Keep in mind that if the loan balance exceeds the home's value, the heirs are not typically responsible for the difference. The Home Equity Conversion Mortgage (HECM), which is the most common type of reverse mortgage, is a non-recourse loan. This means that the lender can only look to the home for repayment, and other assets of the borrower or their heirs are protected.

Contact us immediately as time is of essence.   Reverse mortgage lenders provide not enough time and can foreclose on the property.  Additionally, lenders and loan terms may vary, so understanding the specific terms of the reverse mortgage agreement is crucial.