Short Answer
When you sell a home with a reverse mortgage, the loan must be repaid from the sale proceeds. If the sale price exceeds the loan balance, you keep the difference. If the sale price is less than the loan balance, the Federal Housing Administration insurance covers the shortfall, and neither you nor your heirs are responsible for the difference. The reverse mortgage is paid off at closing, just like a traditional mortgage.
A reverse mortgage becomes due when the homeowner sells the home, moves out permanently, or passes away. When you sell, the title company will order a payoff statement from the reverse mortgage lender. The loan balance, including accrued interest and fees, is paid from the sale proceeds at closing. If there is equity remaining after the loan is paid off, you or your heirs keep that money. If the sale proceeds are not enough to cover the loan balance, the FHA insurance fund covers the difference. This is called a non-recourse feature, meaning the borrower or heirs are never responsible for more than the home's value. Selling a home with a reverse mortgage follows the same general process as selling any home. You list the property, accept an offer, go through inspections and appraisals, and close. The reverse mortgage lender will need to be involved in the payoff process, but your agent and title company will handle the coordination.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
I have helped families sell homes with reverse mortgages, and the process is more straightforward than most people expect. The key is working with a title company and agent who understand how reverse mortgage payoffs work. If you or a loved one has a reverse mortgage and needs to sell, do not let the reverse mortgage scare you off. The equity you have built is still yours. Let me walk you through how the process works and answer your questions.
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