How does a reverse mortgage affect my estate?
When the surviving homeowner permanently moves out or passes away, the estate has two choices:
- Keep the home by converting the reverse mortgage into a traditional mortgage
- Sell the home to pay the balance of the reverse mortgage
Protecting your estate’s value
If the home’s equity is more than the loan balance, all remaining equity belongs to the estate. If the home’s sale price is less than the loan’s balance, the FHA usually helps the lender cover the loss. No other assets are affected by what you owe on a reverse mortgage, so valuable items like investments, second homes and cars cannot be taken to pay off the reverse mortgage.