Yes, you can sell a house that has a reverse mortgage! Once you’ve found a buyer, the sale proceeds will go towards repaying your reverse mortgage loan balance plus interest and fees. The remaining balance from your equity will be yours to keep.
It’s important to note that your reverse mortgage lender cannot pressure or force you to sell your home. If you decide to sell, you’ll need to work with a real estate agent to list and sell your home.
What to consider before selling a house with a reverse mortgage?
Plans change, and life happens. If you need to sell your home because you have decided on an assisted living facility, fund long-term care expenses, or for any other reason – you can.
If you are selling your home because of financial hardship, please consult with your lender about your options to avoid foreclosure.
Here’s what to keep in mind as you think about selling your home with a reverse mortgage:
Your home’s value
You may owe more than your home is worth. If your home value has decreased, you may end up owing more than the sale price of your home. This can make the sale or your home more difficult.
Taxes, insurance and property maintenance
You’ll still be responsible for paying property taxes and homeowners insurance, and maintaining the property while it is listed for sale.
If you have any HOA fees, you will still be responsible for those as well.
Understand what you owe
You’ll need to repay the entire loan balance plus interest and fees. Be sure to factor this into your budget as you plan for the sale of your home.
Refinancing your reverse mortgage loan is also an option to consider.
Picking the right agent
They can help you navigate the process and ensure that everything goes smoothly.
Selling a house with a reverse mortgage is possible, but it’s important to understand the process and what to expect before getting started.
With careful planning and preparation, you can ensure that the sale of your home goes smoothly and that you get the best possible price.
How do you sell a house with a reverse mortgage?
When selling a house with a reverse mortgage, it is important to know how to proceed.
Here is the 6-step process to sell a home with a reverse mortgage:
1. Inform your reverse mortgage lender soon as possible.
Contact your lender immediately if you want to sell the house. You’ll need to let them know of your decision and ask about their requirements.
You need to know the reverse mortgage payoff amount, including the principal, interest and additional fees.
2. Get your house in order.
Once you’ve contacted your lender, take some time to work on your home. This includes decluttering, deep cleaning, and making any necessary repairs.
This will help with the appraised value and make it more appealing to potential buyers.
3. Get an appraisal.
Your agent will help you schedule an appraisal. This will help determine the sale price of your home.
The appraised value may be lower than the market value, so keep this in mind when setting a price.
4. Work with a real estate broker.
Selling a house can be complicated, so it’s best to work with a credible agent. They can help you list your house, find buyers, and negotiate the sale price.
It can be helpful If they are familiar with selling a home with a reverse mortgage.
5. Consult with a real estate attorney.
An attorney can help with the sale of your home and answer any legal questions you may have. They can also review the sales contract to make sure everything is in order.
With careful planning and preparation, you can ensure that selling a home with a reverse mortgage goes smoothly and that you get the best possible price.
6. Close the sale and settle the loan.
Once you’ve found a buyer, it’s time to close on the sale. This includes signing paperwork and transferring ownership of the property.
Your real estate agent will help you navigate this process and ensure that everything goes smoothly.
Once the sale is finalized, the balance plus interest and fees will need to be paid off. Any remaining equity will go to you.
What if my reverse mortgage debt exceeds what my home is worth?
If your reverse mortgage loan balance is more than the value of your home, you or your heirs will not be required to pay any additional money.
A reverse mortgage, also known as a home equity conversion mortgage (HECM), is a non-recourse loan.
This means, you are federally insured by the Federal Housing Administration (FHA), which covers the reverse loan payoff in these situations.
Selling a house with a reverse mortgage FAQ
Who owns the property with reverse mortgages?
Just as with any traditional mortgage, the borrower is the homeowner and property owner while they continue to live in it as their primary residence and make any necessary monthly payments on the home.
The reverse mortgage becomes due when the borrower dies or permanently moves out of the home.
At that point, ownership of the property is transferred to the lender.
Do I have to pay capital gains if I sell while having a reverse mortgage?
You may owe capital gains if you reach a particular threshold after you or your family settles the loan payoff amount.
This can vary depending on your state and the value of your home, so it’s best to consult with your real estate attorney and tax advisor.
How long does it take to sell a house with reverse mortgage after death?
After an offer is accepted, it can take an additional 30 -to -45 day closing period to finalize the sale of the home.
If you inherit an existing home that has a reverse mortgage, contact the lender as soon as possible to discuss your options.
Your options will depend on the terms of the loan and the value of the property.
In most cases, you may be able to pay off the reverse mortgage balance and keep the property.
If you decide to sell, the sale proceeds will go towards repaying your reverse mortgage balance plus interest and fees.
The remaining balance from your equity will be for the heirs to keep.
Does it take longer to close on a home if the seller had a reverse mortgage loan?
Selling a home with a reverse mortgage isn’t much different from selling a home with a traditional mortgage.
There are many factors outside of the reverse mortgage that determines how quickly your home can sell, such as:
- The condition of the home
- Home location
- The housing market in your area
- Your real estate agent’s marketing efforts
- The interest of potential buyers
This may take some time, so be sure to factor this into your timeline.