Can You Sell A Home That Has A Reverse Mortgage

Foreclosure Of A Reverse Mortgage

Just like with a traditional mortgage, is it possible for a reverse mortgage to be foreclosed on. With a traditional mortgage, the reason for foreclosure is typically not making your payments. With a reverse mortgage, there are no monthly payments, so the reasons for foreclosure are different.

• The house is no longer the primary residence .
• The home is sold at this point, the loan is due and payable immediately.
• The owner passes away.
• Property taxes or insurance are unpaid.
• The house is not properly maintained.

Those are the reasons why a reverse mortgage might be called in by the bank. But what if you yourself decide to end the reverse mortgage by selling your house?

Who Owns The House With A Reverse Mortgage

A reverse mortgage loan does not involve transferring ownership of your home to a lender. The title to the home still belongs to you. Interest and fees are added to the loan balance each month, and that amount is then included in your loan balance. Repayment of the loan is possible by selling the house.

If you move out or the last surviving borrower/eligible non-borrowing spouse dies, you must repay your HECM loan, but never beyond the value of the house.

Find A Real Estate Agent

While it is possible to sell your home without a real estate agents help, doing so is more work than most owners are prepared for. For a commission, you can hire an agent who will take care of all the details big and small of the sale.

Your agent can help you price the home competitively, so you get as much as possible from the sale while avoiding pushing away potential buyers by pricing too high.

An excellent agent also knows how to market the home so that you can get the word out to the right kind of buyers.

It would be beneficial for you to interview several different Realtors to make sure you find someone who is a good fit. Not all agents are equal, and you want to know that the person helping you with such a large transaction is someone you can depend on.

Verify the agents references and make sure he or she has a list of homes sold recently. When you find an agent that sells homes for close to the original listing price, you know you have someone who can price a home correctly.

It is also important to choose an agent who is a good communicator. Many real estate agents do not possess good communication skills.

You will find chasing them down to get information could become a regular routine. One clue in an agents communication skills is how quickly they respond to you before hiring them.

If they dont get back to you immediately BEFORE you hire them, what do you think will happen once they have you under contract?

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Use Your Right Of Rescission

Reverse mortgages have a 3-day period directly after you close on your loan in which you can cancel the transaction with no penalty. This is known as the right of rescission and it allows you to change your mind should you have buyers remorse right after you sign the closing documents. Within 20 days, the lender will return all fees, closing costs and unused funds paid by the borrower.

If you decide to practice your right of recission, you will need to inform your lender in writing. Remember, this window of time lasts up to only 3 days after you close. After that, you cannot cancel your loan without penalty.

Understanding Home Equity: How Do I Get A Home Equity Loan

Typically speaking, home equity loans require good to excellent credit, as well as a reasonable loan-to-value and combined loan-to-value ratios, i.e. it needs to be a safe bet for the lender. If you meet those standards, youll want to approach a lender, such as your bank, and choose from the terms they provide. Specifics will vary greatly depending on the size of the loan, your repayment goals, and of course the values inherent in your home.

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The Difference In Selling A Home With A Reverse Mortgage

If you want to sell your home with a reverse mortgage, take a look at your loan documents any other pertinent documents to determine what you have been paid so far.

You want to know exactly what you will be required to pay should you sell your home, including all interest and fees up to the point when you make the sale. You can contact your lender to get a payoff quote, which will tell you what it would cost to pay off your reverse mortgage in full.

When you know what you will need to pay, you can compare that number to what your home is estimated to be worth. It can help speak to a Realtor to get a clear idea of what your home will actually sell for based on your market and comparable sales in your area.

Ideally, your home will sell for more than what you owe on the reverse mortgage. What if you are underwater and your home will not sell for more than the mortgage balance?

Verify If You Need A Real Estate Attorney

Depending on your area, you may need to work with a real estate attorney to sell your home with a mortgage.

You can talk with your real estate agent about this and see if it makes sense. You may want to talk to an attorney even if it is not required, just to make sure everything goes smoothly.

Here in my area of Massachusetts, hiring a real estate attorney is commonplace. I am always advising my clients to have legal representation. It just makes good business sense to be protected when buying or selling real estate.

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Consult A Realtor Or Real Estate Attorney

Your real estate agent will be able to help you determine how much your home is worth and how much you might be able to sell it for. This will help you understand if you can pay off your reverse mortgage balance.

Because the process of selling your home and paying off the reverse mortgage can be complicated, some buyers also hire a real estate attorney to ensure the reverse-mortgage payoff is handled correctly.

Sell To A Fl Cash Home Buyer

A third option is to sell to a cash home buyer like Florida Cash Home Buyers. A cash home buyer could be a single investor or a group of investors that purchase houses with cash. When selling to a cash buyer, they can close a lot quicker than a traditional buyer since they are not waiting on bank financing. Another advantage of selling to cash home buyers is that they purchase homes in as-is condition. Saving you time and money on costly home renovations. When selling a house with a reverse mortgage, the process is very easy compared to the other ways to sell a home.

Homebuyers are very helpful if you want to sell quickly and avoid making costly repairs in a house you wont be living in anymore. Since their process doesnt involve real estate agents, there arent any agent fees or commissions. Homebuyers usually help pay closing costs and even work with you on your closing and moving timeframe. Working with a homebuyer takes the stress and hassle out of the process.

If you still arent sure if selling to a home investor is for you, below are 8 reasons to sell a house with a reverse mortgage for cash in Florida.

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Refinance The Reverse Mortgage

Perhaps it isnt the reverse mortgage you want to get out of, but the specific terms of your reverse mortgage that are the problem. If thats the case, you could consider refinancing your current reverse mortgage into one with better terms. If interest rates are lower than when you first got your loan or your homes value has increased, you could refinance into a new reverse mortgage. This could give you a better interest rate, change an adjustable rate to a fixed rate, help you pay your loan off faster or provide access to more equity.

Keep in mind that youll need to pay closing costs for a refinance.

What You Need To Know About Reverse Mortgage

Are you stuck with a mortgage that you can no longer afford to pay? If so, then you may be wondering if you qualify for a reverse mortgage. A reverse mortgage is basically a loan that allows homeowners to cash in on the equity of their home. The money can be used for anything they want, whether it’s to supplement their income, pay off debts, or cover the costs of home repairs.

Reverse mortgages are for borrowers aged 62 or older that seek to use them to borrow against the equity in their homes. The loan doesn’t have to be repaid until the borrower dies, moves out of the house, or sells the property.

This type of loan is beneficial for those homeowners that don’t have sufficient retirement savings or income to cover their living expenses. If you qualify for a reverse mortgage, it could provide you with the financial security and peace of mind that you need.

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Bona Fide Third Party Sale

In the event of a sale by the current owner or by heirs to a third party, the lender would obtain an appraisal on the home and any payoff amount less than the full mortgage balance would be dependent on that current appraised value or they could still exercise their right to foreclose on the mortgage.

The lender and HUD are not under any obligation to accept less than the amount owed on the loan under a sale to a third party.

In most cases, if the owner has passed and the sale is for the true market value, the short sale would most likely be approved because if that was the value at which HUD or the lender believe they too would be forced to sell the home, there is no reason to go to the added expense and time to foreclose and market the property.

However, if the seller had not passed and there was any question as to the legitimacy of the sale, the approval for repayment at less than the full amount owed may not be granted.

But they still could not obtain a deficiency judgment against the original owner or their estate for any amount they did not receive to repay the loan from the sale. That is the non-recourse nature of the loan.

Contact Your Loan Servicer

The exact date of the maturity event matters because you need to notify the loan servicer of the reverse mortgage within 30 days of the maturity event.

Once your loan servicer receives this notification, theyll send out a due and payable letter.

Having sent the due and payable letter, the loan servicer will then send out an FHA-approved appraiser to assess the current market of the property.

The amount thats due to the lender will either be the total debt amount of the reverse mortgage loan or 95% of its current appraised value if the debt amount exceeds the current value.

Whichever amount is lower is the amount due.

After you the borrower receive the due and payable letter, you then have 30 days from the date of the letter to respond. If you fail to respond to this letter, your reverse mortgage lender can proceed to foreclose on the home.

After you respond, you move on to step three.

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Maturity Events And Reverse Mortgages

When you sell a home with a reverse mortgage tied to it, depending on circumstance, it can trigger what is known as a maturity event, in which advances on the reverse mortgage stop and the balance accrued to becomes due.

Other Examples Of Circumstances That Can Trigger Maturity Events:

• Serious illness or the decision to move to an assisted living facility.
• Home is in disrepair.
• Unpaid property taxes or HOA fees.

Its imperative to be aware that if a maturity event is triggered, then your lender needs to be consistently assured that you are in full cooperation of paying off the debt you owe from the reverse mortgage.

Update The Home If Necessary

One of the most difficult discussions your real estate agent may have with you is the need to update your home to todays standards.

Some of the biggest culprits that can stop a home sale are wallpaper and carpeting that need replacement. While you may think that someone can just do these things if they like the house, many buyers do not have any vision. The dated wallpaper and old carpets can get in the way of seeing the potential in your home!

If your real estate agent tells you that the old shag carpet or dated wallpaper is going to get in the way of the sale, make sure you listen to them!

In my area of Southborough, Massachusetts, and other local communities, I know wallpaper can be a kiss of death in trying to sell a home. People do not like it, especially if it is old.

Nothing can change a home complexion quicker than removing wallpaper and adding a fresh coat of paint in a pleasing off-white.

Another issue you may run into as well is general repairs that have been neglected. Most buyers today want turn-key properties. They do not want to invest the time, energy, or money dealing with someones problems.

One of the big hurdles you will need to be prepared for is the buyers home inspection. Without a doubt, the home inspection is the number one roadblock to a successful sale.

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Be Sure To Explore All Options Before Taking Out A Reverse Mortgage

Reverse mortgages are complicated and usually not the best option for older homeowners seeking access to extra cash. Before taking out a reverse mortgage and tapping into your home equity, you should be sure to explore all of the options available to you. For instance, you might qualify for a state or local program to lower your bills or you could consider downsizing to a more affordable home.

You can learn more about reverse mortgages, as well as other available options for older homeowners, at AARP’s website at www.aarp.org/revmort. Even though you’ll have to complete a counseling session with a HUD-approved counselor if you want to get a HECM, it’s also highly recommended that you consider talking to a financial planner, an estate planning attorney, or a consumer protection lawyer before taking out this kind of loan.

Selling A House With A Reverse Mortgage

Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

Selling a house with a reverse mortgage isnt as simple as selling a home with a traditional mortgage but it can be done with a little planning.

With a reverse mortgage, you borrow against the equity in your property to receive cash upfront or a stream of monthly payments. Instead of paying your bank, your bank pays you. This can be a great way for seniors to meet living expenses in retirement while staying in their home, and the reverse mortgage does not need to be paid back until the homeowner die or leave the home. That includes selling.

• Alternatives to selling a house with a reverse mortgage

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The Truth About Reverse Mortgages

If youre a homeowner over 62 and looking for some extra cash, is a reverse mortgage the answer? We uncover the pros and cons of the reverse mortgage.

Watch daytime TV and youll almost certainly find a commercial that goes something like this:

Do you own your own home? Are you over 62? Would you like more money? Then get a reverse mortgage! The bank will give you money and you dont have to do a thing! Plus, youll still own your own home!

These make reverse mortgages seem too good to be true at best and a scam at worst. But the truth is that reverse mortgages can be legit some are even backed by the FHA. Some, on the other hand, are indeed scams. Lets investigate the truth behind reverse mortgages.

How To Sell A House In Fl With A Reverse Mortgage

Now that weve gone over all the technicalities of selling a house with a reverse mortgage, maybe its been a while since youve sold a home and want a refresher on the process. There are a couple of ways you can go about selling a house with a reverse mortgage loan. Here are the three most common ways to sell a home and their pros and cons.

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