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Wallet Canvas > Mortgage > How do you pay back your reverse mortgage?
Mortgage

How do you pay back your reverse mortgage?

May 20, 2025 8 Min Read
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How do you pay back your reverse mortgage?

When should I pay back my reverse mortgage?

Generally, a Reverse mortgage If there is a last surviving borrower or an unqualified spouse, they must fully repay it.

  • die
  • Selling a house
  • They no longer live in their homes as their primary residence.

The final scenario can occur when the borrower enters, for example, aid living facilities or moves with family members. Down size. However, if the borrower has other medical facilities, such as a hospital or rehabilitation center, or other medical facilities for more than 12 months, the accused spouse may be able to live in the home without paying off the loan. If the borrower leaves the house for some reason and the spouse is a co-borrower, the spouse can also live in the house without paying off the loan.

If the last surviving borrower or eligible borrower’s spouse dies, the heir will be 30 days from the notice paid by the lender to sell, buy or transfer to satisfy the debt. However, this timeline could be extended up to six months to allow the heirs to sell the house or secure their own loan.

“The majority of people who use reverse mortgages are already people with a significant amount of home equity, so most people pay off their loans when their owner dies,” says Cliff Auerswald, president of All Reverse Mortgage, a reverse mortgage lender.

However, there are other situations where you need to pay off your loan faster. This can happen if the borrower stops paying homeowner’s insurance or property taxes or stops maintaining the home, which is devastated.

How do you pay back your reverse mortgage?

There are several ways to repay your reverse mortgage early or when it’s due. Here are six scenarios to consider:

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Option 1: Sell your home and pay back your reverse mortgage with revenue

Once payment is paid, either the borrower or its heirs may decide to simply sell the house to pay off the loan. Sales revenues will first move towards lenders’ repayments. The borrower, or his property, will hold anything left after paying the debt.

Option 2: Refinance your reverse mortgage

If you are a borrower and want to move out of the house but don’t sell it, you can refinance your reverse mortgage with a traditional one mortgage Use your usual monthly payments if you qualify.

“Bringing back to traditional loans means you have to make regular payments on your mortgage again,” said Tabitha Mazzara, director of operations at California’s Mortgage Bank.

Option 3: Take out a new mortgage

If the borrower’s heirs want to maintain the home, they can simply take out a new home mortgage and pay back the balance of the reverse mortgage. This is like refinancing a loan as an original borrower.

Heirs can use the house the way they want, as long as their mortgage allows it. For example, they may choose to live in a home or use it as an investment property.

Option 4: Repayment of reverse mortgage in cash

If the heirs have sufficient liquid funds, they may choose to repay the reverse mortgage with cash. To do this, the heir must request a payoff in writing, including the following information:

  • FHA Case Number
  • Borrower and requester names
  • Property Address
  • Expected payment date
  • Payoff Statement Email and/or Mailing Address
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Option 5: Provide action in place of foreclosure

If everything else fails, the borrower or its heirs can simply give the lender an act to the home. This is known as a Act in place of foreclosure. This avoids the regular foreclosure process, but also means that borrowers and heirs will lose their homes. For this reason, it is usually better to sell or maintain your home.

Option 6: Use right to withdraw

This option only applies if you are very Early in the process of obtaining a reverse mortgage. Most reverse mortgages allow you to cancel your contract within three business days of closing. Right to withdrawno penalty. To do this, you will need to notify the lender in writing within this period (including Saturdays but not Sundays or public holidays) and send the letter via certified mail with a return receipt for the document.

Once cancelled, the lender has 20 days to return the money you paid and release the security interest in your home, but you will need to return the funds or assets received after the security interest has expired.

How to get out of a reverse mortgage with a bad credit score

If your credit score is poor, reverse mortgage repayment options such as refinances may be off the table. In this case, your best bet is probably to sell your house, pay off your loan and walk around with the rest of your cash in your pocket.

Can I repay my reverse mortgage quickly?

There are no rules that prevent you from repaying your reverse mortgage early. The easiest way to do so is to start paying your loan in advance. This also reduces the amount of interest you owe because you do not develop interest in the balance you have paid.

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You can also get out of the reverse mortgage by paying a lump sum if you have the funds to do so. Alternatively, you may be able to refinance your reverse mortgage with a regular mortgage.

Why you can get out of a reverse mortgage?

As your life evolves and your needs change, you may find that reverse mortgages are meaningless to you. Here are some more common reasons to get out of a reverse mortgage:

  • You don’t need money anymore: If your financial situation improves and you no longer need more income, you may not want to continue to be tied down to reverse mortgages.
  • Money isn’t enough to cover your expenses: Even if there’s no monthly mortgage Payment, you still have home maintenance, home insurance, and Fixed Asset Tax. If these costs suddenly go, leaving the reverse mortgage and moving to a more expensive home will make your costs more manageable.
  • You want to move: If you want to move, and the house will no longer be your primary residence, you will need to terminate your reverse mortgage agreement.
  • I want to allow the heirs to maintain their assets: A home is an important asset that you may want to leave to your heirs when you die. In this case, it makes sense to get out of a reverse mortgage to avoid any complications you may face after your death.

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