Your Heirs

A reverse mortgage will have an impact on your heirs after you pass away. Although you do not have to repay your reverse mortgage for as long as you live in your home, your lender will eventually expect repayment, although that may not occur until after you die. That repayment is secured by your home, so your heirs must sell your home after your passing, and use the proceeds to repay the mortgage. Anything that is left would belong to your estate, to be divided up between your heirs as you see fit to specify in your will.

If leaving your home or a large inheritance to your heirs is important, a reverse mortgage may present some problems in that regard, since the home, which is most often your largest asset, is being used as security for the loan, and the loan proceeds must be paid back out of the home’s equity after the end the loan. If your heirs wish to keep your home, they must arrange to pay the reverse mortgage off through other means, either by coming up with the cash, or by taking out a conventional mortgage.

The repayment cannot exceed the value of your home. None of your other assets are affected and the rest of your estate remains intact, regardless of the total amount you received. The debt is not passed along to the estate or to your heirs. Rather, the debt is associated only with the property. Since a reverse mortgage is a non-recourse loan, your heirs are protected. If the total amount of payments you receive exceeds the value of the home, your heirs will not be liable for the difference.