Yes, you can sell your home if you have a reverse mortgage. However, selling a home with a reverse mortgage raises several complexities that need to be carefully navigated. A reverse mortgage allows homeowners aged 62 or older to borrow against the equity in their home without having to make any mortgage payments. The loan balance typically doesn’t need to be repaid until the homeowner sells, moves out permanently, or passes away. If you decide to sell your home before those events, the proceeds from the sale must first be used to pay off the reverse mortgage loan. Understanding this process and ensuring that all legal and financial aspects are handled properly is key to a successful sale.
With the extra issues involved in this type of sale, it is imperative that you engage an experienced Attorney/Realtor to list, market, and sell your home. A traditional real estate agent is simply not equipped to handle the complex issues raised by the termination of a reverse mortgage and the sale of the home. There is no extra cost for an Attorney/Realtor above the real estate commission, so there is no reason to lose out on the extra protections you would receive.
Benefits of Having a Realtor Who Is Also a Real Estate Attorney
Having a Realtor who is also a real estate attorney offers significant advantages when selling a home with a reverse mortgage lien. You will have both legal and real estate expertise on your side (at NO extra cost whatsoever), streamlining the transaction and offering an extra layer of protection. Here's why that’s beneficial:
- Expertise in Real Estate Law and Contracts: An Attorney/Realtor can handle the complexities of the legal documents that accompany the sale of a home with a reverse mortgage. These include contracts, lien releases, and negotiations with the lender. A traditional real estate agent is PROHIBITED from addressing these issues or drafting specific provisions (they are limited to using pre-printed forms from their association).
- Guidance Through Complex Lender Requirements: Working with a reverse mortgage lender can be time-consuming and intricate. An Attorney/Realtor can navigate the legal aspects of dealing with the lender, such as interpreting payoff statements, ensuring compliance with loan terms, and addressing any potential disputes that may arise during the closing process.
- Avoiding Legal Pitfalls: Selling a home with a reverse mortgage involves unique legal considerations that a typical real estate agent cannot fully understand. Having an Attorney/Realtor with extensive real estate expertise helps ensure that all necessary legal procedures are followed correctly, reducing the risk of future disputes with the lender or buyers. Only an Attorney/Realtor is legally authorized to identify and address potential legal issues and ensure that your interests are fully protected.
- Simplified Closing Process: Closing on a home with a reverse mortgage can be more complicated due to the reverse mortgage lien (and possible HUD duplicate lien) that must be cleared. An Attorney/Realtor can oversee this process, ensuring that all lender requirements are met, the payoff is handled correctly, and the closing proceeds smoothly without delays or legal disputes.
What if the Reverse Mortgage is owed more than the Value of the Home?
You might find that your reverse mortgage balance is higher than the value of the home. Nevertheless, working with an Attorney/Realtor will still allow you to sell the home and rid yourself of the mortgage liability. This situation is called a “short sale.” Despite some common misconceptions, you can complete a short sale even with a reverse mortgage.
Not only can you sell your home in this situation, but selling might be the best option to avoid negative credit implications and possible foreclosure.
A “short sale” requires your lender to reduce the loan balance so that the home can be sold. You should never use a traditional real estate agent to complete a short sale. Rather, you need the expertise and skill of an Attorney/Realtor. Having an Attorney/Realtor negotiate a short sale on your behalf ensures that your rights are protected and that the lender agrees to favorable terms. In these cases, legal expertise is particularly important to avoid negative financial consequences.
Take the Time to Speak with an Attorney/Realtor before Taking Any Action on Your Reverse Mortgage
Before making any decisions, it is crucial to gather legal, financial, and real estate advice to ensure your financial interests are completely protected. Selling a home with a reverse mortgage is entirely possible, but it involves unique challenges that require careful attention and management. At Lawyers Realty Group, our experienced Attorney/Realtor can provide insights tailored to your specific circumstances and help you navigate the complexities of selling your home. Call (949) 264-0966 today for a free legal analysis of your situation. There is absolutely no cost or obligation.
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