effect on heirs in reverse mortgage

Hi Gibbs,

Your heirs can sell the home to repay or payoff the mortgage from some other means to keep the home.

If there is any money left on selling the house to payoff the mortgage, then the excess amount goes to your heirs.

Samuel

after your death the mortgage becomes payable. your heirs can make the payment either by selling the home or can refinance the reverse mortgage to keep the home in their possession.

only the outstanding balance on the loan has to be paid. if the money collected from the sale of the house is more than the outstanding amount then the excess amount will go to your heirs.

james

Thanks for the replies. If the outstanding value becomes more than the property value, then my heirs has to pay the excess amount?

Hi Gibbs,

I don't think you need to be afraid of that. The reverse mortgage is a non recourse loan. If the loan balance exceeds the market value of the home, then none in your family has to pay the excess amount.

FHA insurance on the reverse mortgage covers up the balance due to the lender as a result. Yours heirs can't be asked for any excess amount.

James

who pays for the utitlities if no one lives there after the parent dies
its in foreclosure but there are outstanding utility bills

Hi fritzymalone,

If your name is not mentioned in the mortgage and property docs, then you won't be liable for paying the outstanding utility bills. The lender who will foreclose the property may pay off the utility bills.

Thanks