When a person passes away, the heirs must decide if they want to sell the house or convey it to an heir.
With a regular mortgage, heirs have three options:
- Keep paying the mortgage of the deceased person until an heir assumes the loan
- Sell the house to a third person
- Let the house go through foreclosure
When the deceased had a reverse mortgage, the options are the same with the exception that there are no mortgage payments to keep up with. The person simply must tell the lender if they are selling the house, buying it themselves from the estate, or letting it go to foreclosure. Heirs normally have about a year to sell the house. If the house still has some equity, most heirs would sell the house and split the net proceeds. If there is no equity, most heirs let the house get foreclosed because it doesn’t hurt anyone’s credit and avoids the hassle of trying to sell a house.
Have you ever been the executor of an estate? Reverse mortgages actually make it easier in this situation. Realtors who worry about reverse mortgage purchases can feel comfortable working with Origin Title & Escrow because they have closed over 1,100 reverse mortgages.