Inheriting a home can be a meaningful gift—but if that home has a reverse mortgage, it can also raise a lot of questions. Do you have to pay off the loan? Can you keep the house? What if the loan is more than the home is worth?
If you’re navigating a reverse mortgage inheritance, you’re not alone. This guide answers the most common questions about inheriting a house with a reverse mortgage, helping you understand your rights, responsibilities, and options.
Question: Can You Inherit a House That Has a Reverse Mortgage?
Answer: Yes, you can inherit a home with a reverse mortgage. However, the reverse mortgage loan repayment becomes due when the homeowner passes away. As the heir, you’ll need to decide how to handle the loan—whether that means keeping the home, selling it, or transferring it back to the lender.
This is a key part of reverse mortgage estate planning, and understanding your options early can help you avoid unnecessary stress.
Question: Are Heirs Responsible for the Reverse Mortgage Debt?
Answer: Heirs are not personally responsible for the reverse mortgage debt unless they choose to keep the home or manage its sale. If you don’t want to take on this responsibility, you can sign the deed over to the lender and allow them to handle the reverse mortgage foreclosure process.
This flexibility is one of the reasons reverse mortgages are often used in estate planning.
Question: What If the Loan Is More Than the Home’s Value?
Answer: Reverse mortgages are non-recourse loans, which means you’ll never owe more than the home is worth. If the loan balance exceeds the market value, the lender cannot pursue other assets from the estate or the heirs.
If you sell the home for more than the loan balance, you keep the difference. If you decide to keep the home, you’ll only need to repay the lesser of the loan balance or 95% of the home’s appraised value. This is a key protection built into reverse mortgage and heirs policies.
Bottom Line
Inheriting a home with a reverse mortgage requires careful consideration of both legal and financial factors. Whether you want to keep the home, sell it, or walk away, it’s important to understand your rights and the reverse mortgage payoff options available to you.
Before making any decisions, consult with a financial advisor or estate attorney. With the right guidance, you can navigate the complexities of reverse mortgage after death and make choices that align with your family’s needs and your loved one’s wishes.
Reverse mortgage borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.
This information is intended to be general and educational in nature and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement.
