Reverse Mortgage Heirs

What happens when a homeowner dies and leaves a property with a reverse mortgage? The reverse mortgage heirs can keep the property–if they pay off the loan. It’s important that any senior who decides to take out a reverse loan let their heirs know about it. This can help reverse mortgage heirs avoid problems after their loved one passes.

What Is a Reverse Home Mortgage?

A reverse loan allows people ages 62 and up to borrow money against the equity in their homes. The money can be used for any purpose, including buying a new home, paying medical bills, or making home repairs. Many seniors apply for reverse mortgages because they need to supplement a fixed income.

If you are considering a reverse loan, talk with your heirs to let them know what’s happening. You can even ask them to attend a reverse mortgage counseling session with you to learn more about reverse mortgage guidelines. It’s not a good idea to let them be surprised about having to deal with a reverse mortgage after you die.

Keeping a Home

If your heirs want to keep the home after you are gone, the reverse mortgage must be paid off. Money to pay off a reverse mortgage can come from your estate, such as from an insurance payment. But if there is no money available, reverse mortgage heirs would have to come up with the money out of their own pockets.

If they don’t want the home, they can choose to sell it to repay the reverse mortgage and pocket any profit. They can also do nothing (if, for example, the balance of the loan exceeds the property’s value) and let the reverse mortgage lender foreclose on the property. The heirs will owe nothing no matter how high the reverse mortgage balance is.

Consider all your options before resorting to borrowing with a reverse mortgage. There may be other ways to get the cash you need to supplement your income without borrowing against home equity.

This entry was posted on Sunday, May 9th, 2010 at 4:12 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.