Selling a house is no easy task, and having a reverse mortgage on it can make the process more difficult. Knowing what will happen to the reverse mortgage once you sell a house can help you prepare for the aftermath of closing on the house.
When you sell a house with a reverse mortgage, you must pay the remainder of the loan balance and any interest and fees it accrued. But if your home has gone up in value and you can sell it for more than the balance you owe, you can keep the balance.
The following article is a more in-depth description of how to sell a house with a reverse mortgage. It also includes a few things you might want to consider before selling the house.
If necessary, you can leave your home to selected heirs from your family. They can also sell the house if they don’t have the funds to keep paying off the reverse mortgage.
Heirs are family members or friends that you can leave the house to after you pass away. They can keep the home and continue paying the mortgage until the balance is paid off or sell it to pay back the balance. There are some important things you and your heirs should know when considering both options.
If your heirs want to sell the home, they will need to sell it at a price that is greater or equal to the remaining balance on the reverse mortgage. If the sale is successful, then the lender will count the profit from the sale as payment on the loan.
If your heirs don’t have the money to keep paying the mortgage, then the next best option is to sell it. But there are a few guidelines that need to be followed to make the selling process easier for your heirs and the lender.
Firstly, if the balance you owe on the loan is more than the home is worth, then it isn’t recommended to sell it. Your heirs won’t have to pay back the difference on the home, so there’s no use in trying to sell the home for more than it’s worth. If this occurs, then the lender will take the profit your heirs do make as payment on the loan. Federal Housing Administration (FHA) insurance will then cover any remaining balance.
Selling a House with a Reverse Mortgage
There are four main steps you want to take when selling a house with a reverse mortgage. These steps include:
- Contacting your lender
- Consulting a realtor or real estate attorney
- Listing the home
- Selling the house and settling up
Doing these four steps is the easiest way to sell a home with a reverse mortgage.
Before selling a home with a reverse mortgage, the first thing you should do is to find out how much you owe. You can find this out by contacting the lender the mortgage is with, and they’ll inform you of the remaining balance. They will also inform you of any fees or interest that has accrued on the mortgage..
Once you know how much you owe on the mortgage, you should contact a realtor or real estate agent. They can help you figure out how much your house is worth and how much you should try to sell it for. When you get their estimate, you’ll be able to tell if you can fully pay off the mortgage.
You can also contact a real estate attorney. This is someone that’s responsible for making sure the selling process goes smoothly. They can help ensure you pay off the mortgage completely and that the lender or house buyers handle the selling process correctly.
Listing the home means taking some high quality photographs and putting them up on a real estate site. Your realtor will be able to assist you with taking the photos and making sure it’s listed correctly.
When the house is sold, it’s a good idea to contact your lender again to make sure the balance is fully paid off. The lender will then close the account and you will get any excess profits from the sale.
Selling a house by itself can be a complicated process to go through. Adding a loan on top of everything else can make it extra stressful. But fortunately, there are people here to assist you through each step and make sure the loan is paid off.
As long as you get the correct information from the lenders and follow the real estate agent’s advice, then selling your home with a reverse mortgage will be a huge relief.