Paying Off Reverse Mortgages: How does it work?

Another very common question people have is how and when do they have to pay off their reverse mortgage? There are several scenarios that cause paying off the reverse mortgage to be required, read below to find out what they are

Events That Would Cause a Reverse Mortgage to become due

  • When the last borrower (or eligible non-borrowing spouse) passes away
  • When the last borrower (or eligible non-borrowing spouse) moves away for over a year, causing the home to no longer be the primary residence
  • If the home is not maintained properly (What does this mean?).
  • Stay up to date paying the home’s taxes and insurance (unless a LESA is implemented).

How do I Pay Off My Reverse Mortgage

There are different ways to satisfy the HECM reverse mortgage loan when it becomes due:

  • Sell the home, pay off the mortgage and keep the remaining balance.
  • If the loan balance exceeds the value of the home, the heirs will never owe that difference. The heirs can sell the home at 95% of the current appraised value. FHA Mortgage insurance will make up the difference.
  • The heirs can refinance the mortgage and move into the home themselves or turn it into an investment property.


IMPORTANT: A borrower will never outlive a reverse mortgage, the term of the loan is the youngest borrowers 150th birthday

Watch this short video to learn more, and if you feel this may be right for you or someone you know, contact us!