{"id":49237,"date":"2024-10-16T15:54:59","date_gmt":"2024-10-16T22:54:59","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=49237"},"modified":"2026-04-16T01:56:56","modified_gmt":"2026-04-16T08:56:56","slug":"how-does-a-reverse-mortgage-work-when-you-die","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/how-does-a-reverse-mortgage-work-when-you-die\/","title":{"rendered":"How Does a Reverse Mortgage Work When You Die?"},"content":{"rendered":"<p>It\u2019s estimated that more than <a href=\"https:\/\/www.prnewswire.com\/news-releases\/two-thirds-of-peak-baby-boomers-are-not-financially-prepared-for-retirement-302120313.html\">30 million Americans<\/a> will turn 65 between now and 2030. To help ease financial burdens in retirement, many homeowners in this \u201csilver tsunami\u201d are turning to reverse mortgages. But how does a reverse mortgage work when you die?<\/p>\n<p>Whether you\u2019re planning ahead or helping your family understand your choices, we\u2019ll break down what your spouse, partner, or heirs can expect when it\u2019s time to settle the loan. We\u2019ll also provide a few tips you can share with your heirs in advance.<\/p>\n\n\n\n\n\n<div class=\"geo-cta widget-cta widget-cta--content     widget-cta--dark widget-cta--dark-blue-gradient\">\n    <div class=\"widget-element--content\">\n        <div class=\"widget-element--content-header\">\n            <img decoding=\"async\" alt=\"homelight logo\" class=\"widget-element--logo\" src=\"https:\/\/www.homelight.com\/blog\/wp-content\/themes\/ccprototypev5\/images\/logo-small-cta.png\" width=\"106\" height=\"25\" \/>\n        <\/div>\n        \n                <h3 class=\"cta-headline widget--bold\">Sell Your Inherited Home Quickly For Cash<\/h3>\n                        <p>Get a no-obligation cash offer from HomeLight\u2019s Simple Sale platform in 24 hours. Sell when you\u2019re ready without the hassle of paying for repairs or dealing with showings. You\u2019ll also see an expert estimate of what your home might sell for using a top agent.<\/p>\n        \n                <div class=\"widget-element--buttons\">\n            <a data-type=\"In Content CTA\" href=\"https:\/\/www.homelight.com\/simple-sale\/quiz?interested_in_agent=true\" class=\"cta-click-track widget-element--button\">Request Offer<\/a>\n        <\/div>\n                    <\/div>\n<\/div>\n\n\n<p><em>Editor&#8217;s note: This post is for educational purposes. If you need assistance navigating the legalities of selling an inherited home with a reverse mortgage, HomeLight encourages you to consult a professional advisor.<\/em><\/p>\n<div id=\"section--1\" data-toc-header=\"What is a reverse mortgage?\" data-toc-type=\"head\"><\/div>\n<h2>What is a reverse mortgage?<\/h2>\n<p>A <a href=\"https:\/\/www.homelight.com\/blog\/buyer-what-is-a-reverse-mortgage\/\">reverse mortgage<\/a> is a type of loan that allows older homeowners to convert part of their home equity into cash without selling the property. It\u2019s designed primarily for people aged 62 or older who want additional income during retirement. Instead of making monthly mortgage payments, the loan balance increases over time as interest accrues, and repayment typically occurs when the homeowner moves, sells the home, or passes away.<\/p>\n<p>Homeowners can receive reverse mortgage funds in a lump sum, monthly payments, or as a line of credit. While this option can ease financial pressures in retirement, it\u2019s important for you and your heirs to understand the terms and impact on your estate.<\/p>\n<p>In the upcoming sections, we\u2019ll address general after-death rules that apply to <a href=\"https:\/\/www.homelight.com\/blog\/buyer-home-equity-conversion-mortgage\/\">Home Equity Conversion Mortgages<\/a> (HECMs), the most common type of reverse mortgage loan in the United States.<\/p>\n<div id=\"section--2\" data-toc-header=\"How does a reverse mortgage work when you die?\" data-toc-type=\"head\"><\/div>\n<h2>How does a reverse mortgage work when you die?<\/h2>\n<p>What happens to your reverse mortgage when you die will depend on several key factors, including:<\/p>\n<ul>\n<li aria-level=\"1\">Whether you have a co-borrower on the loan agreement<\/li>\n<li aria-level=\"1\">When you took out the loan (before or after August 4, 2014)<\/li>\n<li aria-level=\"1\">Whether you were married when you took out the loan (and stayed married until your death)<\/li>\n<\/ul>\n<p>Here\u2019s how it works depending on your co-borrower status or if your spouse or partner is not on the loan.<\/p>\n<h3>1. If you have a co-borrower spouse or partner<\/h3>\n<p>If your spouse or partner is listed as a <a href=\"https:\/\/www.experian.com\/blogs\/ask-experian\/what-is-coborrower\/\">co-borrower<\/a>, they can remain in the home without needing to pay off the loan right away. The loan continues under the original terms, allowing your co-borrower to stay until they move or pass away. The co-borrower must be able to <a href=\"https:\/\/www.consumerfinance.gov\/ask-cfpb\/what-are-my-responsibilities-as-a-reverse-mortgage-loan-borrower-en-235\/\">meet the obligations<\/a> of the original reverse mortgage loan agreement.<\/p>\n<h3>2. If your spouse or partner is not a co-borrower<\/h3>\n<p>If your spouse or partner is not a co-borrower, they may still be able to stay in the home if they pay off the reverse mortgage loan. However, they may also be able to stay without paying off the loan, depending on when the loan was taken out and if they can qualify as an \u201c<a href=\"https:\/\/answers.hud.gov\/FHA\/s\/article\/Can-I-stay-in-my-home-if-my-spouse-had-a-reverse-mortgage-and-has-passed-away\">eligible non-borrowing spouse<\/a>\u201d under HUD rules, which may be difficult.<\/p>\n<h4><strong>For reverse mortgages taken out on or after August 4, 2014<\/strong><\/h4>\n<p>If you, the borrower, pass away or move into a healthcare facility for over 12 months, your lender or servicer will determine whether your non-borrowing spouse qualifies to stay in the home under a deferral period. To remain in the home, your spouse must meet several criteria to be considered an eligible non-borrowing spouse:<\/p>\n<ul>\n<li aria-level=\"1\"><strong>Marriage status:<\/strong> They must have been married to you when the reverse mortgage was signed and stayed married to you until your death. For same-sex couples who were unable to legally marry at the time of the loan, the spouse must prove they were legally married to you at the time of your death.<\/li>\n<li aria-level=\"1\"><strong>Non-borrowing spouse identification:<\/strong> The loan documents must identify your spouse as a non-borrowing spouse.<\/li>\n<li aria-level=\"1\"><strong>Residency:<\/strong> They must have lived in the home when the loan was signed and continue to use it as their primary residence after your passing or long-term healthcare facility stay.<\/li>\n<li aria-level=\"1\"><strong>Loan compliance:<\/strong> They must continue meeting all loan requirements, such as property tax and insurance payments, to avoid the loan becoming due for other reasons.<\/li>\n<\/ul>\n<h4><strong>For reverse mortgages taken out before August 4, 2014<\/strong><\/h4>\n<p>If you, the borrower, pass away or move into a healthcare facility for over 12 months, your lender or servicer has two main options: proceed with foreclosure or enter the <a href=\"https:\/\/www.lawinsider.com\/dictionary\/mortgagee-optional-election-moe-assignment\">mortgage optional election<\/a> (MOE) assignment process, which may allow a qualified non-borrowing spouse to stay in the home.<\/p>\n<ul>\n<li aria-level=\"1\"><strong>Foreclosure:<\/strong> If the lender chooses foreclosure or finds that your non-borrowing spouse doesn\u2019t qualify for MOE Assignment, they are required to start foreclosure within six months of your passing. However, your spouse may request a delay of up to 180 days if they are actively working to sell the home or satisfy the debt.<\/li>\n<li aria-level=\"1\"><strong>Mortgagee Optional Election (MOE) Assignment:<\/strong> In cases where the lender opts for MOE Assignment instead of foreclosure, your spouse must meet certain eligibility requirements to stay in the home:\n<ul>\n<li aria-level=\"2\"><strong>Marriage status:<\/strong> Similar to loans after August 2014, they must have been married to you when the loan was signed and stayed married to you during any extended healthcare stays or until your death.<\/li>\n<li aria-level=\"2\"><strong>Residency:<\/strong> They must have lived in the home from the beginning of the loan and continue to live there as their primary residence after your passing or long-term healthcare absence.<\/li>\n<li aria-level=\"2\"><strong>Identification and compliance:<\/strong> They must provide a Social Security number or Tax Identification Number, agree to forgo any further reverse mortgage payments, and keep up with all loan obligations, including property taxes and homeowner\u2019s insurance.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3>3. If you have heirs<\/h3>\n<p>According to the <a href=\"https:\/\/www.consumerfinance.gov\/ask-cfpb\/what-happens-my-reverse-mortgage-when-i-die-en-2096\/\">Consumer Financial Protection Bureau<\/a> (CFPB), if your heirs want to keep your house after you and your spouse pass away, they will have to repay either the full loan balance or 95% of the home\u2019s appraised value, whichever amount is less. In the next section, we\u2019ll take a look at what each payoff option looks like.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How does a reverse mortgage work when you die? Explore the options your heirs have to repay the loan. Learn about timelines and home selling tips.<\/p>\n","protected":false},"author":298,"featured_media":49238,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[326,319],"tags":[],"class_list":["post-49237","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inheritance","category-selling-advice"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.0 (Yoast SEO v27.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>How Does a Reverse Mortgage Work When You Die?<\/title>\n<meta name=\"description\" content=\"How does a reverse mortgage work when you die? Explore the options your heirs have to repay the loan. 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