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Different mortgage lenders have different policies in regards XXXXX XXXXX they handle reverse mortgages and their policies and procedures after the last surviving homeowner passes. Many lenders will allow the heirs or the estate to keep the home as long they are able to pay off the amount which is owed to the reverse mortgage lender. However, if they do not have enough funds to pay off the home, they may have to sell the home or the lender may even sell the home to pay off the loan balance and then if there are any funds left, they are supposed to go to the estate or to the heirs. With some lenders when the last co-owner dies, the reverse mortgage holder gets the house as payment for the loan. The estate is never subject to payments to the bank. Different lenders do things a little differently than the next. It would be a wise decision to have whomever is in charge of the estate or an attorney contact the bank where the reverse mortgage is with to express the intentions or desires of the heir(s) of the property. See the bolded statement in the next paragraph.
When the loan ends
The loan ends when the homeowner dies, sells the house, or, depending on the loan conditions, moves out of the house for 12 consecutive months (for example, to go into an assisted living home). At that point, the reverse mortgage can be paid off with the proceeds of the sale of the house, or be refinanced by the heirs of the homeowner's estate. If the proceeds exceed the loan amount, the owner of the house receives the difference; if the owner has died, the heirs receive the difference. For cases where the proceeds are not sufficient to pay off the loan, then the bank (or insurance which the bank has on the loan) absorbs the difference. In most cases when the borrower moves out of the property or dies, as long as the borrower (or his estate) provides proof to the lender that he is attempting to sell the home or obtain financing to pay off the outstanding debt, the investor will allow him up to one year to do so. After the one year extension period is up, the lender cannot provide any further extension of time to the borrower (or estate).
When Do You Pay Back A Reverse Mortgage?
The reverse mortgage becomes due when the last surviving owner dies, sells the home, or permanently moves out of the home. When the loan is over, you or your heirs must repay the loan plus interest, generally by selling the house.
If your debt is less than the selling price of the house, your heirs keep the difference.
It is not possible for you to owe more than your home is worth, and your lender cannot seek payment from your estate or heirs.
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