When Your Parent Dies & Leaves a Reverse Mortgage, This Is What You

When Your Parent Dies & Leaves a Reverse Mortgage, This Is What YouWhen your parent dies and leaves a reverse mortgage, it is essential to understand that you have some rights regarding the reverse mortgage. First, your lender will write you a letter regarding the senior reverse mortgage. The letter is to notify you that the loan is due. It explains the rules and stipulates what is required of you about the property and the loan. Additionally, you will be given 30 days to decide on what to do next. After deciding on whether to pay off the loan or sell the property, the lender provides you sixty more days to complete the transaction. During this time it is essential to maintain communication with the reverse mortgage lender. Upon the death of your parent, it is advisable to move in as first as possible and settle the loan. This is because during this time monthly insurance premiums and interest on the balance keeps on eating into the remaining equity. There are several options available when it comes to settling your mortgage when your loved one dies. One such option is to put the property on the market to pay off the loan. If the equity in the home exceeds the balance of the loan, then you are entitled to the what remains after paying off the loan. In case the value of the loan is more that of the house, you will be required to pay for only what the house is worth. The other option is to pay off the loan and keep the home. In this scenario, you will be required to pay not more than 95% of the appraised value of the house. This is regardless of whether the loan balance exceeds the home’s estimated value. A third option is to sign a deed-in-lieu of foreclosure to give the house to the loan servicer. This is done when you no longer want the home, or if the value of the loan exceeds that of the home. This is usually done to avoid foreclosure. In this case, you will not be expected to have any other financial responsibility on that property, and the lender gets the ownership rights to the property. You could also decide to walk away from the house. The home will then be sold at an auction and the money used to pay off the loan. Most if not all reverse mortgages are Home Equity Conversion Mortgages (HECM). As such you will not be expected to pay any amount if the loan exceeds the value of the home upon the death of your parent.