How Do You Repay a Reverse Mortgage?

One of the most attractive benefits of reverse mortgage loans is that borrowers are not required to pay them back until they have reached maturity. This happens whenever the borrower has passed away, decides to sell the home, or does not live on the property for more than 12 consecutive months. When any of these circumstances occur, the loan will become due in full.

How do you repay a reverse mortgage? Senior couple in their home.

How do you repay a reverse mortgage? This article explains how to repay a reverse mortgage.

The most common way to repay a reverse mortgage is by selling the home and giving the lender the proceeds from the transaction. This can be taken care of by either the borrower or the beneficiaries of their estate. Another significant advantage of reverse mortgages is that the borrower is only obligated to pay what the home sells for, even if it’s a lesser amount than what is owed.

If the borrower or their loved ones wish to retain homeownership, they can choose to repay the loan with personal funds or by refinancing the reverse mortgage and turning it back into a traditional mortgage loan. It is also possible for borrowers to begin repaying their reverse mortgage long before the loan has matured by simply making monthly payments during the life of the loan. This option is offered without any penalties for pre-payment.

Reverse mortgages can be an extremely useful financial tool to supplement retirement income and enhance the quality of life for those living out their golden years. With the flexibility to repay the loan in a variety of ways, borrowers can feel comfortable they’ll find a repayment method that works for them.