What happens to a reverse mortgage when the parent dies
페이지 정보
본문
The question comes up often. A parent passes away and the house has a reverse mortgage. What happens now? The answer depends on who wants the house and what the loan paperwork says. But the basic steps are the same for most families in California.
First, you will get a letter from the loan servicer. This is the company that handles the reverse mortgage payments. The letter will say the loan is due and payable. That sounds scary but it is normal. It means the lender wants the money back because the borrower is gone. The letter usually gives you a certain amount of time to decide what to do. That time can vary based on your situation. You should read the letter carefully and keep it in a safe place.
The reverse mortgage does not mean the house is taken away from the family. You have options. The main three are buying the house, selling it, or giving it back to the lender. Each one works a little differently.
If you want to keep the house, you can buy it. You pay off the reverse mortgage balance. That balance is typically less than the full loan amount because the loan pays out over time. You can use your own money, get a regular mortgage, or borrow from family. Talk to a lender or a CPA about what makes sense for your finances. You also need to think about property taxes and insurance after the house is yours.
Selling the house is another common choice. The sale pays off the reverse mortgage first. Any money left over goes to the estate. If the house sells for less than the loan balance, you may not have to pay the difference. That is called a non-recourse feature. It is in most reverse mortgage contracts. But check the specific loan documents to be sure. A real estate agent who knows reverse mortgages can help you with the sale.
The third option is to hand the house back to the lender. You sign a deed in lieu of foreclosure. This means you give the house to the lender and the loan is canceled. You do not get any money from the sale. But you also do not owe anything more. This can be a clean way to end things if no one wants the house or the estate has no cash.
Some reverse mortgages have special rules. If the borrower was living in a nursing home or had a spouse who is not on the loan, the rules change. You may need to talk to a reverse mortgage house after a death HUD-approved housing counselor. They can explain the options for free or low cost. A lawyer who handles probate in Sacramento County can also help if the estate is complicated.
The county recorder or the probate court may need documents too. Every situation is different. The main thing is to not ignore the letter from the servicer. Call them and tell them you are the heir or the executor. Ask for the deadline and the payoff amount. Then take your time to pick the option that works best for your family.
More notes on this topic are at a reverse mortgage house after a death.
