What Happens to Your Home If You Pass Away With a Reverse Mortgage?

Reverse mortgages—especially popular among Florida retirees—can be powerful financial tools. They allow homeowners aged 62+ to tap into home equity without monthly mortgage payments. But one of the most common (and important) questions we hear at Sun National Title Company is:

“What happens to my home when I die if I have a reverse mortgage?”

The answer matters not only for you, but for your heirs, estate planning, and long-term financial strategy. Below, we break it down clearly so you and your family know exactly what to expect.

Understanding How a Reverse Mortgage Works

A reverse mortgage, typically a Home Equity Conversion Mortgage (HECM), allows homeowners to receive cash based on their home’s equity.

Importantly, the loan becomes due when the borrower dies, moves out permanently, or sells the home.

So what happens next?

1. Your Heirs Have Options

When a homeowner with a reverse mortgage passes away, the lender notifies the estate that the loan is due. Heirs typically have 30 days to notify the lender of what they plan to do, and up to 6 months (often extendable up to 12 months) to take action.

Your heirs can:

Option 1: Pay Off the Reverse Mortgage and Keep the Home

Heirs may choose to keep the home by paying the lesser of:

• The full loan balance, or

• 95% of the home’s current appraised value (a consumer protection feature of HECM loans)

This is helpful if: ✔ The home has sentimental value. ✔ The family wants to retain it as an investment. ✔ The balance is lower than the home value

Option 2: Sell the Home

If your heirs decide to sell, proceeds go toward paying off the reverse mortgage.

• If the home sells for more than the loan balance → heirs keep the remaining money.

• If the home sells for less → heirs owe nothing; FHA insurance covers the difference.

Option 3: Walk Away / Allow Foreclosure

Heirs are not personally responsible for the debt.

If they prefer not to keep or sell the home, they may simply allow the lender to foreclose. There’s no hit to their personal credit or finances.

2. Can a Spouse Stay in the Home?

Yes—a surviving spouse who was listed as an eligible non-borrowing spouse can continue living in the home without making mortgage payments, provided:

• They were living in the home at the time of the borrower’s death

• They maintain taxes, insurance, and home upkeep

This protection prevents widowed spouses from being forced out of their homes.

3. What If the Estate Has Other Debts?

Reverse mortgage lenders are paid first from the sale of the property. The remaining assets (if any) then flow into the estate.

Since heirs are not personally liable for a reverse mortgage, these loans cannot pursue heirs’ personal assets—only the home itself.

4. Planning Ahead Makes a Huge Difference

If you have a reverse mortgage, communication with your loved ones is critical.

We recommend: ✔ Adding heirs to important loan documents. ✔ Sharing contact information for the lender and servicer. ✔ Keeping your home insured and taxes current. ✔ Informing heirs if you want them to keep, sell, or walk away from the home

This helps avoid delays, stress, and legal complications after your passing.

5. How Sun National Title Company Helps

At Sun National Title Company in Fort Myers, we routinely assist families navigating real-estate transitions involving reverse mortgages. We can help with:

• Title searches and lien verification

• Coordinating payoff quotes

• Handling sales involving reverse mortgages

• Providing guidance for heirs on their legal options

• Ensuring a smooth closing process, even with complex estate issues

Whether you’re planning ahead or handling a loved one's estate, our team is here to support you with clarity and care.

Final Thoughts

Passing away with a reverse mortgage doesn’t mean your heirs are burdened with debt. They retain full control over what happens to the home—and federal protections ensure they never owe more than the home is worth.

With the right planning and the right team on your side, reverse mortgages can be managed smoothly and confidently.

If you or your family have questions about reverse mortgages, probate-related sales, or Florida real estate closings, Sun National Title Company is here to help. Give us a call today to learn more. 239-334-3321