Understanding what happens to your reverse mortgage after death helps you and your heirs plan with confidence.
What are your heirs' options after death?
When the last borrower passes away, the reverse mortgage becomes due and payable, and heirs typically have several months (initially six, with possible extensions) to act. They have three choices: repay the loan balance, often by refinancing, and keep the home; sell the home, pay off the loan, and keep any remaining equity; or, if the home is worth less than the balance, sign over the deed and walk away owing nothing thanks to non-recourse protection. Heirs should contact the loan servicer promptly. Call 1-800-MEDIGAP to help your family understand these options in advance.
What protections do non-borrowing spouses have?
An eligible non-borrowing spouse can usually remain in the home after the borrowing spouse dies, even though the loan is in the deceased spouse's name, provided HUD's deferral conditions are met. These include being married at closing, being named in the loan documents, continuing to live in the home as a primary residence, and keeping taxes and insurance current. No new funds are available during deferral, but the spouse is not forced to move. Rules are specific, so plan ahead. Call 1-800-MEDIGAP to confirm how non-borrowing spouse protections apply to you.