Inheriting a Home with a Reverse Mortgage: A Step-by-Step Guide

Before making any decisions, it’s wise to speak with professionals who can guide you through the legal and financial complexities of a reverse mortgage inheritance. Consider working with: 

• An estate attorney 
• A financial advisor 
• A real estate agent familiar with reverse mortgages 

These experts can help you understand your rights, evaluate your options, and avoid costly mistakes. 

As soon as possible after the homeowner’s passing, contact the reverse mortgage lender. This is a critical first step, as it officially triggers the loan’s “due and payable” status. The lender will send a notice outlining the timeline and your responsibilities as the heir. 

Before you can make any decisions about the property, you’ll need to confirm your legal right to it. This may involve: 

• Going through probate 
• Being named in a will or trust 
• Transferring the deed into your name 

Request a payoff statement from the lender and get a professional appraisal of the home. This will help you understand: 

• How much is owed on the reverse mortgage 
• How much the home is worth 
• Whether it makes financial sense to keep or sell the property 

You have several options, depending on your goals and financial situation: 

Option 1: Keep the Home 

You can pay off the reverse mortgage using cash, refinancing, or other inherited assets. This is a good choice if you want to live in the home or keep it in the family. 

Option 2: Sell the Home 

Selling the home allows you to use the proceeds to pay off the loan. If the sale price exceeds the loan balance, you keep the difference. 

Option 3: Sign Over the Home 

If you don’t want to keep or sell the home, you can sign a deed in lieu of foreclosure. This transfers ownership to the lender and ends your responsibility. 

Option 4: Do Nothing 

If you take no action, the lender will foreclose on the home. Because reverse mortgages are non-recourse loans, you won’t owe more than the home’s value. 

Heirs typically have six months to settle the loan, with the possibility of two 90-day extensions (up to 12 months total). It’s important to stay in communication with the lender and request extensions if needed. 

Bottom Line

Inheriting a home with a reverse mortgage doesn’t have to be overwhelming. By following Heirs typically have six months to settle the loan, with the possibility of two 90-day extensions (up to 12 months total). It’s important to stay in communication with the lender and request extensions if needed. 

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.