With that said, heirs will need to decide how they would like to proceed with the estate within a set time period. The borrower will always retain the title to the home. In a reverse mortgage, the lender does not own the property so the lending institution may not sell the house on notification the borrower has died or the last eligible non-borrower spouse has passed away. The loan is considered payable and due when a borrower passes away. What happens to a property with a reverse mortgage when the owner passes away? When the loan is considered payable due to the borrower’s death, heirs will need to contact the lender to decide their course of action in regards to the estate. If the borrower permanently moves out of the home or passes away, the loan will also be due. Wondering how a reverse mortgage works when repayment is due?Ī reverse mortgage or HECM loan will mature and become payable if the borrower fails to keep up with property taxes, repairs, and maintenance. No other payments need to be made besides property taxes, maintenance fees, and insurance payments. The proceeds from a reverse mortgage act as extra income for seniors who may need to pay for medical expenses or if they want to delay taking out Social Security benefits. In a reverse mortgage, however, a borrower converts the equity in their home into cash. With a regular mortgage, a borrower pays off the loan, month by month, and gains equity in the home with each payment. When does a reverse mortgage loan mature? Navigate directly to the section relevant to you or simply continue reading for a comprehensive overview of reverse mortgage information for heirs. There is a timeline within which heirs must make decisions regarding the estate and may either repay the loan balance, sell the home, or deed the home to the lender to satisfy the obligation of the mortgage.īelow are the responsibilities for heirs of a home with a reverse mortgage when the loan becomes due. So, what happens to reverse mortgage heirs when the borrower passes away and the loan matures? Reverse mortgage heirs’ responsibility for a HECM loan depends on a few factors. The loan only becomes due when there is a maturity event: a borrower passes away, sells the house, or no longer lives in the property.
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The borrower must first meet a series of qualifications such as owning a considerable percentage of a home that serves as his or her primary residence and must be at least 62 years of age. Heirs may delay for three months twice, meaning they have up to a year to pay directly or sell the home to satisfy the debt.Īs you may already know, a reverse mortgage-otherwise known as a HECM loan-allows seniors to receive extra income by converting the equity in their home into usable cash.After 6 months, the lender may foreclose on the home to collect on the debt. They must also decide whether they will stay in the home.Heirs must have the home appraised within 60 days of the maturation event.That means surviving heirs or inhabitants of the house are entitled to pay off the loan if they wish to keep or remain in the home.Reverse mortgage lenders do not own the home once the loan becomes payable.Reverse mortgages mature after a maturation event, such as the death or departure of the borrower from the home.