If you took a reverse mortgage on your home, you might wonder whether you still have the freedom to sell your home. It’s a fair question, because if you’re considering downsizing, moving closer to family, or changing your living situation, you should be able to put your property up for sale and use the proceeds to fund the next chapter of your life.
The short answer is that selling a house with a reverse mortgage is possible. My Tennessee Home Solution has some advice on what you need to know before you move forward and how to make the process easier.
What Is a Reverse Mortgage?
A reverse mortgage enables older homeowners (typically those aged 62 and above) to tap into their home equity for cash. Instead of selling the house or making payments, homeowners receive a lump sum of cash or monthly payments from the bank. Many people choose to take out these loans to ensure a steady income that allows them to remain in their homes.
Reverse mortgage balances grow over time. The loan doesn’t need to be repaid until the homeowner sells, moves out, or dies.
How Does Selling a House With a Reverse Mortgage Work?
Selling a house with a reverse mortgage is similar to a traditional sale, with a few extra steps.
You must hold the title to the home and make a mortgage lender notification of your intent to sell the property. Notifying the lender allows them to provide you with a payoff amount, which includes the loan balance, accrued interest, and fees.
You must know the payoff amount because the sale proceeds will go toward this debt first. If the sale price is more than the balance you owe, the remaining home equity goes to you or your heirs. The original agreement will detail the loan repayment requirements for selling a house with a reverse mortgage; in most cases, the repayment usually comes straight from the sale proceeds.
On the flip side, if the house sells for less than what you owe, the lender can’t come after you or your estate for the difference. This is because these are non-recourse loans, and mortgage insurance covers the difference between the proceeds and any remaining balance.
Navigating the Closing Process
When selling a house with a reverse mortgage, the closing process typically involves your real estate agent, title company, and the lender. Everyone works together to pay off the loan correctly and distribute any remaining funds appropriately. There may be a few more documents and disclosures than during a typical closing.
Simplify the Home Selling Process
Selling a house with a reverse mortgage the old-fashioned way can be time consuming, and when you consider the costs of commissions and fees, it can take a big bite out of your home equity.
Working with My Tennessee Home Solution makes the process easier. Call us at (615) 933-5431 to request a free, no-obligation cash offer on your home and close within a few days — no repairs, cleaning, or listing required.