Hello Sue,As the property owner, you have control over who inherits your home by creating a will. If you pass away without a will, the state's intestate succession laws determine how your assets are distributed. Typically, this follows a set order of priority, such as spouse or domestic partner, children, grandchildren, parents, and siblings. The person who inherits the home would need to repay the loan, either using their own funds, obtaining a new loan in their name, or selling the property to pay off the reverse mortgage with the sale proceeds. If no one is legally entitled to inherit the property and therefore cannot repay the loan, the lender would need to foreclose since the loan becomes due and payable at that time.It's important to note that the lender doesn't automatically receive the home if the borrower passes away or if there's no heir. Instead, the lender must go through the legal foreclosure process if the loan isn't repaid. This process involves a Trustee's sale if a Deed of Trust was used, or a court-ordered sale in the case of a judicial foreclosure. Both scenarios involve an auction where the lender's opening bid is set at the amount owed. If no one outbids the lender, they become the owner by default. However, if another bidder surpasses the lender's bid, the lender is paid from the sale proceeds, and the highest bidder becomes the property owner. Any excess funds (amounts exceeding the debt owed) would be added to the estate and distributed according to court direction. If there are no estate debts and no heirs, remaining funds may escheat to the state, but this is ultimately decided by the court and state laws.

Hello David,Let's talk about what the loan is and what it is not. A reverse mortgage is a loan, nothing more and nothing less. The difference between a reverse mortgage and a traditional "forward" mortgage is that with a reverse mortgage, you do not make any payments on the loan. The interest that accrues is added to the loan balance rather than being paid monthly. Instead of making monthly payments and seeing your balance decrease, as with a traditional loan, you make no payments and the balance increases as interest is added. This is referred to as a "falling equity, rising debt" scenario, compared to a "rising equity, falling debt" situation with a forward loan due to the payments you make.When you pass, the house goes wherever you planned for it to go based on the provisions you put in place. In the absence of those plans or provisions, a court will step in and dictate the outcome, just as they would for any homeowner who passes intestate (without a will or other directives). When you pass, the home will go to the person or persons designated in your prior instructions. If you do not specify, the probate courts will determine your heirs, and the home will pass to them. I highly recommend that everyone take the time to complete a will or, preferably, a will and trust. At the very least, have a will and final testament that states your wishes for the distribution of your property, your last wishes, and an administrator for your estate. This is not intended as legal advice; please consult your estate attorney for that purpose. The decisions you make and the provisions you put in place will determine where the house will go at that time.The loan will be due and payable, so you should discuss this eventuality with your chosen heirs. They can sell the home and pay off the loan with the sale proceeds, pay off the loan with their own funds, or refinance the loan at that time. The loan must be repaid if they wish to keep the home. They also have the option to walk away and owe nothing; it will never adversely affect their credit, and they cannot be made to pay anything if they do not wish to. The choice is always theirs, but if there is still equity in the home, it is always best to either pay off the loan or sell the home and keep the equity rather than allow the loan to go into foreclosure for non-payment. This could happen simply because they were unaware of the due provision or unprepared to act, and the lender foreclosed because the heir did nothing to pay off the loan. They will have ample time to pay off the loan or sell the home if they are aware of the need to retire the reverse mortgage, but they cannot ignore this obligation forever.You will receive complete disclosures of all the fees, an amortization schedule, and the opportunity to attend counseling with a HUD-approved counselor. Ask all the questions you need and make sure you understand the answers you receive. If you are not happy with the costs or do not feel the loan is right for you, do not proceed with it. A reverse mortgage can be a good option for some people and not for others. The bottom line is that it must be the right option for you and your circumstances, and only you can make that decision. Once you have all the information, you will be able to determine if the loan makes sense for you.

Hello Cathy, Any existing loan or liens would need to be paid in full of the reverse mortgage proceeds first. This would create a new loan on your property that would be a reverse mortgage, not requiring you to make any monthly payments on the loan (you would still be required to pay your property charges such as taxes, insurance and HOA if any). Any funds available to you through the reverse mortgage above and beyond the amount need to pay off the existing liens and the costs of the new loan are yours to use as you wish. I would suggest that you check out our online calculator to see what you might expect to receive on a reverse mortgage based on the HUD calculations for your age, property value and what you currently owe. Then you can decide if the loan is right for your circumstances.

Hello Debra, It really is sad when anyone is displaced from the spot, they have called home for years. I can only hope that by reading this, anyone else in your position now will take it to heart and make the proper arrangements before that time comes. Every homeowner with a reverse mortgage knows that when they are no longer living in the home as their primary residence, the loan becomes due and payable. In the case where there are others also living in the home that are not borrowers on the loan, the borrower and the others need to take steps in advance to be sure that they are covered when this time comes. Firstly, if the homeowner desires to leave the home to the individuals remaining in the home, they need to take care of those arrangements before the time comes when it is too late to do so. It is so easy to put things off but no one knows when something may happen that you are no longer able to sign legal documents due to death or incapacity and once that happens, it may be too late for the homeowner's wishes to be followed. Homeowners should make plans for who the house will pass to and set up a viable method to pass the title long before the time comes. An estate attorney can help with a trust or whatever you both deem is the best method in your state/area. Next, the people living in the home need to realize that the loan will become due and payable at that time and plan accordingly. This means that if you wish to keep the home, you will require the means to refinance the loan into a new loan in your name once you have the title to the property. If you do not have the means to secure a new loan, then you would need to sell the property and keep any remaining equity in it. If there is no equity in the home, you can continue to live in the home until the lender completes the foreclosure process at which time you would be required to leave. Occupants also living in a home with a reverse mortgage must realize that this will happen one day should the reverse mortgage borrower predecease them. Hopefully, the fact that there is no mortgage payment due on the reverse mortgage and that it ultimately takes about a year at least from the passing of the borrower before a foreclosure is usually completed, it will give you an opportunity to save funds for the relocation if you are not entitled to the property or there is no equity in the home. Other than that, I am sorry for your circumstances, but I have no other advice to give. Fortunately, you do probably have about a year (maybe more) with no mortgage or rent payments to prepare for the move but it would have been much better had you started earlier, when the owner was still alive and able to sign documents.

Hi David, Everyone has to consider their own needs and goals when considering whether or not to get a reverse mortgage. It is true that for many borrowers, if they consider the amount that they would pay elsewhere, the reverse mortgage can make them much better off than paying a monthly payment on another loan, especially in the instance we've just gone through where real estate values decline.