Just like having a conventional mortgage, when the last homeowner of a property with a reverse mortgage passes away, the property is typically transferred to the heirs. The heirs have the option to keep the property, sell it, or refinance it. However, it's important to note that the outstanding loan balance must be repaid to the bank.
As heirs, you generally have a reasonable amount of time to decide on the future of the property. This timeframe is often referred to as the "due and payable" period. During this period, which usually lasts from six months to a year, you can explore your options, such as obtaining financing or selling the property.
Should you wish to keep the property, you have the option to refinance the reverse mortgage into a traditional mortgage loan. This allows you to retain ownership while assuming the responsibility for mortgage payments. It's important to consult with a mortgage specialist to explore this option and determine its feasibility.
To recap, the process is very similar with a traditional mortgage. The mortgage becomes due and payable upon sale or death of the last borrower. The big advantage of a reverse mortgage is there are no monthly payments. So your family will have an opportunity to settle the estate without having to make monthly payments. On a conventional mortgage you would have to make payments until you sell or pay off the loan, or you would be subject to late fees, attorney fees and or a forclosure proceeding.
We have worked with many of our clients heirs to make sure the propery is protected and they make the right decision for thier future.