Will a Reverse Mortgage Allow for an Estate for Heirs?
One of the most commonly asked questions that reverse mortgage lenders get asked by the elderly is what happens to their home when they pass and whether or not their heirs are responsible for the debt of the home.
When the property with the reverse mortgage is no longer used as the primary resident or when the borrower passes on, the reverse mortgage balance becomes due. Typically when the borrower passes on, the home is sold with the proceeds being applied toward the reverse mortgage balance that includes the principal, interest and other related financing charges. Once all fees and debts are paid off, the remaining proceeds is then passed onto your heir, spouse or estate.
At no time will the debt be passed to the estate of the borrower or any heirs, even when the proceeds of the property is not enough to pay off the amount owed from the reverse mortgage.