Can my heirs keep or sell my home if I have a reverse mortgage loan?

 Can my heirs keep or sell my home if I have a reverse mortgage loan? 

 

It all depends. If there are no co-borrowers or an eligible non-borrowing spouse, your heirs must pay the entire loan debt in order to keep the house. To sell it, they would have to repay the entire loan sum or at least 95% of the appraised value if the loan debt is greater than the home value. 

 

When you die, as well as any co-borrower(s) or qualifying non-borrowing spouse, your Reverse mortgage lenders san diego debt becomes due and payable. Your heirs have 30 days after receiving the lender's due and payable notice to buy, sell, or turn the house over to the lender to fulfill the obligation. This is true for the most frequent type of reverse mortgage loan, Home Equity Conversion Mortgages (HECMs). 

 

If your heirs must sell the house, 

Some heirs may not have enough money to repay the reverse mortgage loan and may be forced to sell their house. 

 

If the loan total is less than the home's worth, your heirs can repay the loan and pocket the difference. If the loan total is greater than the home's value, your heirs can sell the home for at least 95% of its current appraised value to pay off the loan. The mortgage insurance that the reverse mortgage borrower paid during the loan's term covers the remaining loan balance. 

 

If you want your heirs to keep the house, 

If your heirs want to keep your home instead of selling it, they must pay it off with monies from another source. The loan debt must be paid in full. 

 

How to Get Ready 

If you have a reverse mortgage loan and want to leave your house to your children, you should discuss repayment options with them right away. You should also consult with a specialist about developing an estate plan. 

 

Learn how reverse mortgages work. 

A reverse mortgage converts the homeowner's home equity into cash payments. You preserve the home's title but borrow against its equity. The money received from the lender is normally tax-free and comes in the form of monthly installments or a lump sum. As long as you live in the house, you are not required to repay the loan. However, the debt will become payable if you die, fail to pay property taxes or insurance, allow the home to fall into disrepair, sell the home, or no longer use it as your primary residence. The lender cannot sue you or your estate for the balance of the loan, but it can sell the house. Never let a lender put you under duress or rush you through the procedure. Before signing anything, be sure you understand the features and entire cost of a reverse mortgage. 

 

Keep your heirs up to date. 

The loan will become payable when the last remaining borrower dies, sells the home, or relocates. This means that if your heirs want to keep the house, they must pay the lesser of the loan balance plus interest and fees or 95% of the home's fair market value.