How Can a Successor Trustee Pay off a Reverse Mortgage?
- The basic idea behind a reverse mortgage is that you can borrow against the equity in your house once you reach the age of 62. Once you borrow the money, you do not have to make any payments back to the lender. The loan will simply need to be paid off if you die or if you sell the house and move. These loans are only available for individuals who use the home as their primary residence.
- One of the ways that the successor trustee could potentially repay your reverse mortgage is to sell your home. The trustee can market the home for sale with a real estate agent. When a sufficient offer is made, the successor can accept the offer and use the money to pay off the reverse mortgage. This option may not work if it selling the house takes too long. The successor will have to work closely with the lender to ensure that the terms of the agreement are not being violated.
- Another option that the successor trustee has is to refinance the home and pay off the reverse mortgage. This option can be difficult because someone will typically have to personally guarantee the new mortgage. If the deceased willed the house to a family member and that individual wants to keep the house, he could refinance the loan and simply start making payments on the new loan. If no family members want the house, they could simply disclaim it and allow the lender to foreclose on the loan.
- In some cases, the estate will be sufficient enough to pay for the reverse mortgage debt. For example, if the deceased had a life insurance policy, the successor trustee could use part of that money to pay off the reverse mortgage debt. If the estate has enough liquid assets, they can also be used to pay for the reverse mortgage debt. The successor trustee also has the ability to sell some of the property to generate money to pay off the mortgage.