How long do my heirs have to pay off a Reverse Mortgage? Will my family have to pay extra if the house does not sell? Can my heirs get the house back?
When you sign a reverse mortgage contract it will specify the length of time allowed for an estate to reclaim the house. On average, the reverse mortgage company will allow up to 6 months for the heirs to payoff the reverse mortgage. However, there are a few companies that only allow 60 days prior to placing the home on the market for sale. You will need to verify the exact terms with your mortgage lender.
Will my family have to pay extra if the house does not sell?
When a home is sold and the proceeds used to pay a reverse mortgage, the family will be responsible for any short falls in the selling price unless the mortgage was insured. Federally insured reverse mortgages alleviate any responsibility that the estate may incur if the home does not sell for a high enough price to cover the debt.
On the other side of this issue, if the reverse mortgage holder sells the home for above the amount owed, the estate will be given all of the extra proceeds.
Can my heirs get the house back?
When you have a reverse mortgage the mortgage holder automatically assumes control over the home upon your death. At that time, heirs will be given the opportunity to pay off the reverse mortgage and resume ownership of the house. There is usually a grace period of 60-180 days for the family to pay off this debt. If, at the end of the grace period, the family does not pay off the debt, the mortgage holder will place the home on the market for sale.
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