Can you sell a house with a reverse mortgage without running afoul of bank policies or losing thousands of dollars? You can, and plenty of homeowners do it successfully every year.
Homeowners age 62 and older can tap into their home equity without making monthly repayments with a reverse mortgage. The lender makes monthly payments to the owner, and the loan balance grows over time with interest and fees added. The balance only becomes due when the home is sold.
At Professional Home Buyers, we buy houses with reverse mortgages all the time, making what could be a complex process easy. If you want to downsize, relocate closer to family, or need to move for any reason, a reverse mortgage doesn’t lock you in forever.
What Happens When You Sell a Home With a Reverse Mortgage?
Selling with a mortgage isn’t unusual. Homeowners list properties they still owe money on every day and pay off the loans with proceeds from the sale.
Selling with a reverse mortgage is no different. Even though the lender is making the payments, the home still belongs to the borrower. When they sell, the proceeds first go toward the reverse mortgage payoff amount. And just as with a traditional mortgage, if the home sells for more than the loan balance, the seller keeps the remaining cash.
But can you sell a house with a reverse mortgage if the sale price doesn’t cover the payoff amount? Yes. If the property sells for less, mortgage insurance (for HECM loans) covers the difference, and the borrower or their estate never owes more than the home’s value.
This non-recourse protection offers borrowers peace of mind, especially since it also covers their heirs and beneficiaries if they pass away. The same rules apply to inherited properties, which can be a relief for anyone who needs to settle the loan.
How To Sell a House With a Reverse Mortgage
Selling a home with a reverse mortgage requires lender approval. Owners must notify the bank of the intent to sell and request a payoff statement outlining the exact amount needed to close the loan. HUD counseling is often part of the original process before taking out a mortgage, and those same guidelines help ensure a clear path when selling later on.
Although working with a real estate agent experienced in selling homes with reverse mortgages can help the process go smoothly, working with a cash buyer can speed things up. A cash buyer is an especially good option if the home needs repairs or the market is moving slowly. The longer the home goes unsold, the more interest accumulates on the loan, which increases the payoff amount.
Explore Your Options With Professional Home Buyers
Can you sell a house with a reverse mortgage and still benefit financially? In many cases, yes. Understanding the reverse mortgage payoff, loan balance, and lender approval process makes it easier to move forward with confidence.
For homeowners ready to explore options for selling with a mortgage, Professional Home Buyers offers straightforward solutions. Call (316) 202-1628 today to learn about fast, flexible sales and get a no-obligation cash offer.