I have a reverse mortgage, but I no longer want a reverse mortgage. How can I pay it back without taking out a loan? I have had the mortgage for about 10 or 11 years. I don't have enough money to pay back all at once. Can I make payments to the bank holding the mortgage? Also, can I sell some of the acres I don't use on the property?By Mary T. on 01.13.2019
You can pay off your reverse mortgage in whole or in part at any time with no prepayment penalty. You can make payments, pay it off in “chunks,” and pay it all at once; it’s entirely up to you and your finances. If you wish to sell some of the land encumbered by the reverse mortgage without paying the loan off, that will require a partial reconveyance by the lender and HUD’s participation.
I do not believe they would participate in a partial reconveyance since the loan is sold into a security, and they may not be able to do it. I think you would have to be able to pay the loan in total if you planned to sell a portion of the land to pay off the loan because I do not believe a lender or HUD would modify the loan with a partial reconveyance in such a way.
You could use a combination of payments and then refinance simultaneously with a lot split and sale of excess land to eliminate the liens or have a very small conventional loan remaining on the new smaller lot and improvements. If you have family or others who can finance the payoff of the reverse mortgage, they may be able to carry the remaining balance until the lot is split and the sale of the excess land is.