Question: My husband and I live in Leisure World in Mesa. We paid cash for our home. We have been talking to a neighbor about the benefits of a reverse mortgage so that we can get the money to do more traveling. If we get a reverse mortgage, who pays off the reverse mortgage when we die? I am concerned that our children will have to pay off the reverse mortgage.
Answer: There is no requirement to “pay off” of the reverse mortgage when you die. The reverse mortgage lender will sell your home, and after satisfying the amount owed under the reverse mortgage, any remaining money should be distributed to your children. Instead of having the lender sell the home, your children could elect to “pay off” the reverse mortgage to continue ownership of the home.
Note: Although when you get a reverse mortgage you have no mortgage payments, you have the obligation to maintain the home in good condition. You also may have the obligation to pay homeowners insurance and property taxes for your home. If you do not fulfill any of your obligations in the reverse mortgage, the lender may be able to foreclose on the home during your lifetime.