Can You Sell a House With a Reverse Mortgage?

Dealing with lenders can be confusing. There’s a lot of paperwork, and most people merely skim over it. That’s why we get a lot of questions, like, “Can you sell a house with a reverse mortgage?” 

The short answer is, “Yes, you can sell your house under these circumstances, it’s just a little more complicated.” You have to pay off the loan before you can transfer the property to someone else.

Understanding the Reverse Mortgage Payoff Amount

A reverse mortgage is different from a standard one in that the amount grows over time because you don’t make repayments. That’s why you need an updated payoff statement before you make any decisions. 

Outstanding Loan Balance and Home Equity

The difference between your home’s value and the outstanding loan is your equity. If the value is higher, you get the excess after closing costs. Getting the numbers right on this helps you determine whether it makes sense to sell. If the balance and value are almost the same, you won’t get much after closing costs. 

Using Sale Proceeds To Repay the Loan

Can you sell a house with a reverse mortgage? You can, but just remember that your lender gets the first claim on the money from the sale. Your closing team will pay off the loan and any costs before you see a dime. 

What if the property sells for less than the amount owed? Most reverse mortgages include protections that prevent you from being liable for more than the home’s value as long as you’ve followed the loan terms. 

Working With the Loan Servicer

The loan servicer plays a central role in the process. They provide payoff details, confirm account status, and coordinate with the closing team to ensure the loan is satisfied.

Working with them helps avoid delays. Most sellers request updated figures as the closing date approaches to account for interest changes.

Mortgage Closing Costs and Final Steps

Mortgage closing costs affect how much the seller ultimately receives. These may include real estate commissions, title services, taxes, and administrative fees. All costs are deducted from the proceeds before any remaining funds are distributed. Reviewing these expenses ahead of time helps create a clearer picture of the final outcome. Dealing with a direct cash buyer can be preferable here, because it means that you don’t have to hand over a chunk of money to an estate agent. 

How The Kind Home Buyer Recently Helped a Cincinnati Homeowner Sell With a Reverse Mortgage

At The Kind Home Buyer, we recently worked with a seller in Cincinnati who inherited a property from their father that had a reverse mortgage on it. The situation became difficult very quickly because the seller was having a hard time communicating with the reverse mortgage company and getting an accurate payoff amount.

On top of that, the property needed significant repairs. The seller had already torn up all the carpet and removed the flooring, leaving the home in a condition that made it very difficult to sell on the traditional market. They had tried listing the property and working with other buyers, but no one could secure financing due to the amount of work required.  

We stepped in and offered a simple as-is cash solution. After evaluating the property, we made a fair offer and were able to move forward quickly.  

A big part of the challenge was dealing directly with the reverse mortgage company. We handled that process for the seller, working to obtain the payoff and coordinate everything needed to close. This took a major burden off their shoulders.  

The seller was living in Tennessee, which made the situation even more stressful since they had to travel back and forth to deal with issues at the property. To make things easier, we arranged for a mobile notary so they could close remotely without needing to come back to Ohio.  

We were able to close within a couple of weeks and resolve the reverse mortgage before the payoff deadline became a bigger issue. The seller was extremely relieved to have the situation handled and to be able to sell the property as is without making repairs or continuing to deal with the lender.

If you’re dealing with a similar situation, we can provide a solution without requiring repairs

Moving Forward With the Sale

Can you sell a house with a reverse mortgage? Yes, you can. It’s relatively simple once you understand the payoff requirement. You have to settle the loan and closing costs when you close, and you will get any remaining equity. 

The key is to get accurate payoff information from your lender up front and then make sure your closing team coordinates with them properly. 

Want to make it as simple as possible? Call The Kind Home Buyer at 513-951-8863 to discuss a cash sale or other issues like selling during a redemption period.