That is the question my sister-in-law asked my husband two weeks after my mother-in-law passed away. The “they” was the appraisal company calling to say they would be at my mother-in-law’s house to appraise the value for the company that holds the reverse mortgage on her house. Reverse mortgage companies, and many other businesses employ rooms of people who do nothing more than scan the obituaries daily to see if their account holders have passed.
When someone has a reverse mortgage on their home and passes away, the heirs have a couple of choices. They can sell the house, or turn the keys back over to the reverse mortgage company and walk away. Which path to walk down may not be an easy choice.
My mother-in-law took her reverse mortgage in 2007 when property values were very high. The reverse mortgage paid her a nice monthly income until she passed, thus, allowing her to use her equity and live comfortably, now we have to make the decision as to how to dispose of the home.
Her reverse mortgage company had an appraiser contact us less than two weeks after her passing so they could determine market value, to get access to that figure, and the balance of the reverse mortgage required submitting legal documents to the mortgage company. What we have to look at as nothing more than cold, hard number is;
How much is owed on the reverse mortgage?
What might realtor fees be?
What might probate cost? Because there was no beneficiary listed on the deed, or joint owner to the house, probate is an issue.
Generally, a home with a reverse mortgage must be disposed of within 90 days. Heirs of the homeowner have the right to petition for a four month extension, three times, adding another 12 months on to the disposal time frame.
The bottom line for us will be: is there enough, if any, equity in the home? If not, we will turn the keys over.
I happen to think that a reverse mortgage can serve a great purpose to many retirees, but each decision to do so requires a lot of consultation and thought.
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