- Purchase the property: The heirs can choose to purchase the property by paying off the remaining loan balance with their own funds, or with a new mortgage loan.
- Sell the property: They can also choose to sell the property to repay the loan.
- Turn the property over: Lastly, they can turn over the property to the loaner, who will sell it to repay the loan. This option allows the heirs to avoid any repayment responsibility.
When a borrower passes away, their heirs are often left with the responsibility of managing their estate and finances. This can include resolving any remaining debts, including the balance on a reverse mortgage. So, what happens to a reverse mortgage when the person dies? Here are the key details to keep in mind:
Co-borrowers or eligible spouse: If the person who passed away had a co-borrower or eligible spouse on their reverse mortgage, that person can continue to live in the home and access the remaining loan funds. The loan will not become due until that surviving borrower passes away or moves out of the home permanently.
Loan due and payable: If there are no surviving co-borrowers or eligible spouses, the reverse mortgage loan becomes due and payable upon the borrower’s death. The borrower’s estate will receive a due and payment notice from the loaner.
30-day window: Once the due and payment notice is received, the borrower’s heirs have 30 calendar days to decide what to do with the property and the loan. They have three options: