Once your home sells, the proceeds are used to pay off your loan balance and any outstanding fees. A real estate agent can help you decide what upgrades are needed and how to price the home, as well as coordinate showings, though you aren’t required to hire one.Īlso, keep in mind that if it appears you aren’t actively trying to market the listing, you could get in legal trouble with your lender. You’ll also want to take photographs of the property, market the listing and show the home to potential buyers. Just don’t overpay to totally renovate the place you want to come out with as much of a profit as possible, and most renovations don’t equate to a dollar-for-dollar increase in home value. To ensure you can sell the home for as high a price as possible, spend some time making necessary repairs and getting the property in its best shape possible before listing it. Keep in mind that this will result in additional fees that will come out of any profits from the sale. A real estate attorney will help you navigate the timeline and process so you don’t make any errors that could cost you. However, it’s actually required in some states. You may or may not feel the need to hire a lawyer to help with the sale. If you’re selling the home due to a maturity event, an appraisal is due within 30 days of that event. If the value is less than you owe on the reverse mortgage, it’s important to have an official appraisal on hand so that the lender will accept a lower amount to satisfy the debt. Next, you should get an appraisal of your property to find out the fair market value of your home. Keep in mind that quotes can expire, so it’s important to work toward paying off the loan as soon as possible. You should receive an official payoff quote in writing, detailing the balance left on the loan and what amount of money is necessary to repay the loan in full and close the account. If you plan to sell your home, it’s a good idea to loop in your reverse mortgage lender right away. If you decide to sell your home while you have a reverse mortgage, it’s important to understand the steps involved. 6 Tips When Selling a House With a Reverse Mortgage But if you’re working with a private lender, the rules may vary. When the sale proceeds aren’t enough to cover the loan balance, it’s known as a borrower’s short sale.Īlmost all reverse mortgages are HECMs. If a maturity event causes the mortgage to become due-but the real estate market has dropped-you can sell the property for the amount of the outstanding loan value or 95% of the appraised value, whichever is less. In other words, you (or your heirs) won’t ever owe more on the loan than what your home is worth. However, a federally backed reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), is considered a non-recourse loan. On the other hand, if you’re able to sell your home for more than your reverse mortgage balance (including interest and fees), you get to keep the difference. That means your debt increases as time goes on, and you may not receive much of a profit on the sale (or even none at all). Though the process for selling a home with a reverse mortgage is pretty similar to selling with a traditional mortgage, there are a couple of important differences to keep in mind.Ī big difference is that instead of gaining equity as you make mortgage payments over time, you actually lose equity as you receive payments from your reverse mortgage. If you decide you simply want to sell your home, you’re free to do so at any time without penalty. However, not all maturity events are so dire. Often, that requires selling the property to cover the balance. The same is true if your home falls into disrepair or you fall behind on property taxes, insurance payments or homeowners association (HOA) fees.Īll of these situations are known as “maturity events” and trigger the reverse mortgage to come due. For example, if you die or have to move into an assisted living facility, the house would likely need to be sold. Not only is it possible to sell a house with a reverse mortgage-in some cases, the home may have to be sold. Can You Sell a House With a Reverse Mortgage?
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