If you have heirs
If your heirs want to keep your home after you and your Eligible Non-Borrowing Spouse die, your heirs will have to repay either the full loan balance or 95 percent of the home's appraised value – whichever is less.
Your heirs might not have the money pay off the loan balance when it is due and payable, so they might need to sell the home to repay the reverse mortgage loan.
An adult child who inherits a home that has a reverse mortgage would need to pay off the balance to keep the home, though they're not legally obligated to do so.
Because a reverse mortgage is a loan, it must also be repaid like any other loan. The loan is due when the borrower sells the home, passes away, or fails to comply with the terms of the reverse mortgage. If the home is sold, the loan is repaid, with the owner or the estate receiving any excess.
When you take out a reverse mortgage loan, the title to your home remains with you. This webpage has information about HECMs, which are the most common type of reverse mortgage. Most reverse mortgages are Home Equity Conversion Mortgages (HECMs).
No, a mortgage can't remain under a deceased person's name. When the borrower passes away, the loan won't disappear. Instead, it needs to be paid. After the borrower passes, the responsibility for the mortgage payments immediately falls on the borrower's estate or heirs.
A reverse mortgage usually must be repaid when the borrower moves out for 12 consecutive months or more, such as into a nursing home or other care facility. If the borrower is married, their spouse can remain in the home under certain conditions.
Selling a house with a reverse mortgage isn't as simple as selling a home with a traditional mortgage — but it can be done with a little planning. With a reverse mortgage, you borrow against the equity in your property to receive cash upfront or a stream of monthly payments.
The right to potentially assume (take over) the mortgage.
All successors in California have a right to apply for an assumption of the loan, as long as the loan is assumable. The servicer may evaluate your creditworthiness, including your credit scores, when considering you for an assumption.
Yes ofcourse if the heirs have inherited a property and it is encumbered with a mortgage and the heirs have defaulted, they can be sued without fail.
Reverse mortgages have extremely high fees compared with other options and are usually a bad idea for most people. They are an especially bad idea for anyone with a family home that they want to leave to their heirs.
The problem, say advocates, is that many senior homeowners don't understand the fine print in a reverse mortgage. Some wrongly assume the lender will pay the taxes and insurance. But fall behind on those payments or fail to maintain the home, and the lender can foreclose.
If your reverse mortgage loan is in default and you've received a notice that the loan is “due and payable,” you may sell your home for 95 percent of its appraised value.
It's possible to get out of a reverse mortgage if you use the right of recission, pay off the loan by selling it, or refinance your loan entirely. If all else fails, you can sign the deed over to the lender.
If the end of your term is up before you pass away, then you have outlived your reverse mortgage proceeds. With a term payment plan, you reach your loan's principal limit—the maximum you can borrow—at the end of the term. After that, you won't be able to receive additional proceeds from your reverse mortgage.
After the passing of the last surviving borrower, the reverse mortgage loan balance becomes due and payable. Your heirs can decide whether to repay the loan balance, keep the home, sell the house, and keep the equity, or walk away and let the lender dispose of the property.
Under reverse mortgages and traditional home mortgages, a property will serve as collateral when a borrower violates their end of the loan agreement. Only in this situation can a reverse mortgage company or bank take your home.
Can a family member take over a reverse mortgage? Unfortunately, no. You cannot add a family member to an existing reverse mortgage. However, the surviving spouse may be eligible to continue receiving benefits by applying for a deferral through the HUD, even if they were not originally on the loan as a co-borrower.
A borrower can only take out a reverse mortgage on a home they own and live in for the majority of the year. If the borrower leaves the home for more than six consecutive months for a non-medical issue or 12 consecutive months for a medical issue, the loan will become due.
A reverse mortgage may be a good idea if:
You and your spouse/partner are both 62 or older. You are in a strong financial position. You are able to physically maintain your home.
If you bequeath your home to someone or have a joint owner with the right of survivorship, your heir has to decide what to do with the home and the mortgage. Generally speaking, the person who inherits must either assume the mortgage and start making payments or arrange to sell the property.
Yes, that is fraud. Someone should file a probate case on the deceased person.