INHERITING A HOME WITH A REVERSE MORTGAGE CAN BE TRICKY

Pay Off Mortgage Or Turn Over Home

In some ways, inheriting a house that has a reverse mortgage on it is no different from inheriting any other house. You have to decide whether to keep the house or sell it. 

But it can be tricky because whatever you decide to do, you'll have to pay off that reverse mortgage one way or another.

How much you have to pay back depends on what kind of reverse mortgage is involved:
  • For Federal Housing Administration Home Equity Conversion Mortgages (HECMs), you'd pay no more than 95 percent of the current market value of the home.
  • For a proprietary, non-Federal Housing Administration mortgage, the lender will tell you how much you have to pay to keep the house. That amount can be more than the home is worth right now.
Keep The House

If you decide to keep the house, you can pay off the reverse mortgage with your own money or funds from the estate. 

Or, you can get a new mortgage to pay off the reverse mortgage. To get a mortgage, you need:
  • A down payment
  • Stable income
  • Good credit
If you need help finding a trustworthy lender, give me a call, or click Email Me below to let me know.

Sell The House 

If you don't want to keep the house, you can sell it and use the net proceeds to pay off the reverse mortgage.

If the proceeds are more than the reverse mortgage, you get to keep the difference. 

If the proceeds are less than the reverse mortgage, you won't get any cash from the sale.

What might cause the house sale to net less than the amount you need to pay off the reverse mortgage?
  • The owners lived longer than the expected life span so the lender paid out more than expected.
  • The home's value hasn't recovered from the recession.
  • The home is in poor condition or has a lot of deferred maintenance.
Value Is Critical

Since the home's value is going to influence your decision, it's important to get an accurate estimate of what it might sell for in the current market. Give me a call or click Email Me below and I can send you data from the most recent nearby home sales.

While the reverse mortgage lender is going to hire its own appraiser to estimate the home's value, it's good for you to have your own comparable sales data so you know the appraisal is accurate.