Selling a House With a Reverse Mortgage in Today's Market

A reverse mortgage can be beneficial for a variety of reasons, but it may also come with a few downsides, especially if you plan on selling your house in the near (or far) future. But what should you know about selling a house with a reverse mortgage?

How is it any different than selling your house regularly?

Can you sell a house with a reverse mortgage without encountering any problems? Can I sell my house with a reverse mortgage? Keep reading and find your answers below.

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Can You Sell a House With Reverse Mortgage?

There are many questions that a person needs to ask themselves before they decide to sell their house. One of the most important questions to ask is can you sell your house with a reverse mortgage? The simple answer is yes, you can.

However, while that is the case, there are certain things you should keep in mind. This is because there are a few details you will need to consider when selling your house with a reverse mortgage compared to selling a home without a reverse mortgage. The good news is that as long as you do everything correctly and advise the right people about your decision, you shouldn’t encounter too many problems.

By the end of the entire process, you should be able to sell your house and move on with your life. The main thing you need to do is contact your reverse mortgage lender before you decide to put your house up for sale.

You should also remember what a reverse mortgage is. This type of mortgage does not require you to make payments (at least, not at first). On the contrary, you can get money from this kind of mortgage.

This is because it allows you to take the equity of your home via monetary payments. Many people may decide to get a reverse mortgage for a variety of reasons. Some may decide to get this kind of mortgage to do repairs on their home, to buy something nice, and so on.

Whatever the case, many people get reverse mortgages as they can be quite useful. But you also need to consider that there are different types of reverse mortgages out there. For that reason, you should be familiar with the different types before you put your home up for sale.

Types of Reverse Mortgages

Learning how to sell a house with a reverse mortgage doesn’t have to be impossible, but there are a few things you should consider. A popular type of mortgage is a Home equity conversion mortgage (HECM). It doesn’t have any income limitations and you can use this mortgage for just about anything.

For that reason, it is one of the most common types of reverse mortgages out there due to how versatile it is. The main downside is that counselling is necessary before you go through with the mortgage. Whatever the case, it is a good choice for most people.

Another type of reverse mortgage is a proprietary reverse mortgage. Instead of being given by federal lenders, this mortgage is instead provided by private lenders. This is often the most popular reverse mortgage among those who have homes that have very high appraisal values.

There is also a single-purpose reverse mortgage. This type of mortgage is not very popular because it is relatively limited. As the name infers, you can only use this mortgage for one thing which is why it is not very popular.

For example, you may be able to use this mortgage to make a repair on your property, but that’s it. Knowing the difference between these reverse mortgages is important because a certain type may be more beneficial to you than others. More than that, certain types may have additional details that you may need to consider in comparison to others.

What You Need To Consider Before Selling

When you sell a house with a reverse mortgage, you should know that it is not quite the same as selling a house without this kind of mortgage. In particular, when you have a reverse mortgage, you have the title but not the lien. On the other hand, the lender of that mortgage has the lien.

What does this mean exactly? One of the most important takeaways from this is that your house can’t get foreclosed. Besides that, the big thing about a reverse mortgage is that it needs to be repaid at a certain point.

The time period in which it needs to be repaid will depend on a variety of factors, although most of the time, you can repay the amount due at just about any time you want. There is also no penalty associated with when you decide to pay it off.

As you can imagine, this leaves you in a very flexible and stress-free situation. But there are a few more things that you need to think about before you go ahead and sell your house with a reverse mortgage.

Pros of Selling a House With a Reverse Mortgage

There are, of course, quite a few benefits of selling your house with a reverse mortgage. The most notable benefit is that, as mentioned before, there are no penalties involved when it is time for you to pay off your mortgage. Some mortgages penalize you when you decide to pay off the mortgage early, but not a reverse mortgage.

You can pay off this kind of mortgage as early as you want (or as late as you want) and you won’t have to worry about any penalties. Another big benefit is that if there are any excess proceeds after the sale of your home, you get to keep them. Of course, you need to use a lot of that money to pay off the reverse mortgage first, but after that, you can keep the rest and do whatever you want with it.

As you can imagine, this would be an especially big benefit if you know that your home has only increased in price over the years. That way, you’ll have plenty of excess money to deal with. But what if your house has decreased in value?

In that case, you still won’t need to pay any difference between the original mortgage cost and the price that your home sold for. Instead, you’ll only have to deal with the mortgage balance. As you can imagine, this can help you out quite a lot financially.

Cons of Selling a House With a Reverse Mortgage

Of course, you can’t have a few pros without also having a few cons. Fortunately, there are not too many downsides to speak of, although you should be aware of the ones you may encounter. The biggest downside is that it may take a long time to list and sell your house with a reverse mortgage.

You might even encounter some confusing problems. This is much more likely to happen if your home has lost value over the years. If your home has appreciated in value, then you likely won’t have to worry about this problem too much.

Another downside is that, unsurprisingly, a large chunk of your home’s equity will go toward paying off the reverse mortgage. But you will need to expect this since it only makes sense that the money from selling the home will go partially to paying off the reverse mortgage.

But, as mentioned before, most of the excess money will go to you to do with as you please.

Mistakes To Avoid

You will want to avoid not telling your lender about your decision to sell your house. You should always advise the lender about this kind of decision. That way, the lender will be prepared and you might learn some important information that may be necessary or significant when it is time to sell your house or pay off your reverse mortgage.

Another mistake is trying to go through this entire process on your own. If you do, you will likely end up confused, stressed, and frustrated. A better option is to find a company or partner that will help you get through this easily and smoothly like iBuyer.

Steps of Selling a House With a Reverse Mortgage

If you are thinking about selling your house with a reverse mortgage, you might be wondering where you should start. After all, if you don’t think ahead and plan what kind of route you want to take, things could get confusing.

The first step has to do with notifying your lender.

Notify Your Lender

Notifying your lender about your decision to sell your house is important for a variety of reasons. One of the most important reasons is that it has to do with finding out how much you owe on your reverse mortgage. Your lender should provide you with all of this information as well as any fees you may have that may come along with how much you owe.

When paying off what you owe, you should have the information in writing. That way, it will be easier to document and sort through later on, if necessary. If you don’t notify your lender when you sell your house, you could end up dealing with a lot of complications and confusing situations

For that reason, you should make the smart decision and contact your lender ahead of time so that the entire process can proceed in a smooth manner.

Talk to a Real Estate Specialist

Talking to a real estate specialist is another very important factor you should consider when selling your house with a reverse mortgage. As mentioned before, you should avoid trying to go through this process alone. This is because you will likely encounter problems that you may not know how to properly deal with on your own.

This is why it is important to have a good real estate specialist on your side. A real estate agent is the most typical option, but you don’t always have to pick a real estate agent if you don’t have to. Instead, you can choose a company that specializes in this sort of thing and knows all about selling homes with reverse mortgages.

iBuyer, for example, is a great choice for this sort of thing. Opting for a company like this to help you with your real estate woes can make your life infinitely easier. It will also take most of the heavy weight from your shoulders so that you can focus on other matters that might require your attention as you go through the process of selling your house.

Get Your Home Ready To Sell

Another big thing to do, of course, is preparing your home so that it is ready to sell as soon as you put it up for sale. While homes tend to take a few weeks to a few months to sell, you should make sure your home is prepared right away.

That way, as soon as your home sells, you won’t have to worry about your house and instead can look to the future and look forward to where you might move next.