How to deal with a reverse mortgage after a loved one passes away in San Francisco.
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How to deal with a reverse mortgage after a loved one passes away
Due to San Francisco’s high housing prices and expensive costs of living, many retirees decide to take out a reverse mortgage to take advantage of their home equity and to afford to continue living to this beautiful city.
Unfortunately, a reverse mortgage can create a lot of problems for their children or other heirs when they pass away.
One of the best things you can do to ease the pain of your passing for the family you leave behind is to make sure that your property and legal affairs are all in order. By making your arrangements in advance with a San Francisco Estate and trust administration lawyer, you can put your mind at ease by having plans in place to pay off a family members reverse mortgage after they pass away. At Bassin law in San Francisco,CA, we practice in this area of the law.
Unlike traditional home equity loans or second mortgages, reverse mortgages do not require monthly mortgage payments. Instead, the loan is repaid when the borrower no longer lives in the home.
What rights do the family of a reverse mortgage borrower have when the borrower dies?
After a reverse mortgage borrower dies, their “heirs” may have rights under the loan agreement. Heirs are people with legal rights to property of another after that person’s death. A surviving spouse who was not married to the reverse mortgage borrower at the time of the loan may be an heir.
Once the borrower dies, the lender will expect to be paid or to take back the property. If you are an heir who wants to keep the property, you must take action and communicate with the lender. Review the loan terms and make sure to follow their deadlines to prevent a forclosure.
You will need to provide proof that you have rights to the property. This proof is often a death certificate, a will, or a trust. If a borrower did not leave a will or trust, California law will determine the heirs and their ownership rights to the property.
Whether the heirs are a surviving spouse or 10 or more family members it is important to have a trust and estate planning lawyer at your side to represent you and assist you with the administration of the decedents estate.
Upon the death of the borrower, the lender will send an appraiser to determine the home’s market value. As an heir, you do not have to pay off the reverse mortgage balance in full to keep the property.
Some reverse mortgage loans default and become due and payable upon the death of the homeowner. Although the borrower may allow extensions to give the heirs time to pay off the loan it is important to take action to prevent the lender from imediate forclosure.
Communication is key, by hiring and San Francisco reverse mortgage, trust administration and estate planning lawyer we can assist you through the process of dealing with reverse mortage lenders and help you find a financial solution that is right for you
If you are unable to pay off the balance due on the loan, you may be able to pay through a bankruptcy plan or by getting a mortgage in your own name to pay off the amount owed.
If you decide you not want to keep the property, you can sell the property for at least market value. Often the proceeds from the sale would cover the balance owed to the reverse mortgage company. If the sale proceeds are more than the value of the home, you can keep the difference.
If you do not want to keep or sell the property, the lender will foreclose on the property and sell it. The lender cannot come after the heirs for more money if the sale of the home does not cover the balance of the loan. Keep in mind that if you opt to allow the lender to forclose that interest continues to accrue during that time period which could greatly reduce the amount of money you would recieve in a foreclosure sale.
If you are not the only heir, you may need to work together with the other heirs to keep or sell the home. There are deadlines on exercising your rights. We suggest that you consult with a San Francisco reverse mortgage, Trust adminsitration and Estate planning attorney as soon as possible after the death of the borrower.
We have experience working with all kinds of loan servicers, although we most frequently encounter loans from Finance of America Reverse if your estates property is burdend by a revser mortage Call our San Francisco estate planning and reverse mortgage lawyers today.
Why You Might Need to Pay Back a Reverse Mortgage
There are several reasons why a reverse mortgage on a San Francisco home might need to be repaid:
- The homeowner sells the home.
- The homeowner no longer lives in the home as their primary residence (e.g., moves to a nursing home).
- The homeowner passes away.
- The terms of the loan require repayment.
2. Repayment Options
The options to repay a reverse mortgage can vary depending on the lender and the specific loan agreement. Generally, the loan can be repaid through:
- Selling the home
- Refinancing the reverse mortgage with a new loan
- Using other financial resources or funds
3. Selling Your Home
Most often, reverse mortgage are repaid by selling the home. The proceeds from the sale will go towards paying off the loan balance. If the sale price exceeds the loan balance, the remaining equity will go to the homeowner or their heirs.
4. Refinancing the Reverse Mortgage
Refinancing the reverse mortgage can be another option. This involves taking out a new loan to pay off the current reverse mortgage. This option may be suitable if the homeowner qualifies for a new loan with more favorable terms or if they want to extend the loan period.
5. Paying Off the Loan from Other Funds
If the homeowner has sufficient financial resources, they can pay off the reverse mortgage using other funds. This could include savings, investments, or financial assistance from family members. Paying off the loan in this way can allow the homeowner to retain ownership of the home.
Paying back a reverse mortgage in California, or anywhere else, involves understanding your options and making informed decisions based on your financial situation. Whether you choose to sell the home, refinance, or use other funds, it’s essential to consider all your options and seek advice from financial experts if needed.