How to Sell a Home with a Reverse Mortgage

A reverse mortgage is a type of mortgage loan that enables homeowners, particularly seniors, to access the accumulated equity value of their home without selling it.

Reverse mortgages first arrived in the 1960s but have become popular in recent years. More homeowners are using them for the funds required to comfortably age in place.

Sometimes, however, plans change. Some homeowners discover they want to move after all, perhaps to be close to family. Others move into an assisted living environment to help them with the demands of aging. What happens to the reverse mortgage then?

Good news: You can still sell a home with a reverse mortgage – if you know how.

Selling Your Home With a Reverse Mortgage

The majority of homes on the market have an outstanding mortgage. A reverse mortgage is very similar. Although it might seem intimidating, it merely means you'll need to do things in the right order.

Here's the best approach to selling your home with a reverse mortgage:

1. Consider Prepaying Your Mortgage
   One of the most important things to remember about a reverse mortgage is that you can pay it any time you are able. Some other loans include penalties that cost you more money if you pay early – a reverse mortgage is required to be penalty-free. Look at your budget, goals, and resources to determine whether paying early ("prepayment") is a possibility.
2. Discuss Things With Your Lender
   To move forward on paying any part of your loan, you'll need a formal payoff quote from your lender. A payoff quote is more accurate than the account summary you may be able to obtain on the lender website, but it is only valid for a short period of time. Your lender may also be able to suggest payment options to help facilitate your moving goals.
3. Contact a Real Estate Agent
   When your home is sold, the proceeds are used to pay off the remaining balance of your reverse mortgage. With that in mind, it's vital to connect with the right real estate agent. He or she can ensure your home is priced to sell while still meeting all your financial goals. Attracting reliable, motivated buyers within 90 days is the hallmark of a successful sale.
4. List Your Home for Sale
   Once your real estate agent is up to date on your needs, he or she can take the reins on the selling process. Still, it's wise to be ready to provide a unique perspective only you can offer. For example, the seller is often a crucial part of a successful open house. Your agent will advise you on the attention your property is getting, and layout offers for you to consider.
5. Optionally, Talk to a Real Estate Attorney
   It isn't usually crucial, but a real estate attorney can do some extra footwork to be sure your reverse mortgage is fully paid off. This extra layer of verification will protect you from any chance the funds you get from the home sale aren't used the way you want.
6. Get Evidence of Your Loan Payment
   Last, but not least, follow up with your reverse mortgage lender one last time. They should issue a final statement that shows your balance is paid off in full. This can be sent to you in the form of registered mail you have to sign for, so the receipt is confirmed on all sides.

Selling your home with a reverse mortgage doesn't have to be a headache. Reach out to a real estate agent you can trust, and they'll make the process easier.

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