If you or one of your close family members owns a home with a reverse mortgage in Ohio, you might be wondering if it’s at all possible to sell the house. The short answer, luckily, is yes. That said, the process isn’t without its caveats, and it works differently than it does with a traditional mortgage.
Selling a home with a reverse mortgage involves some extra steps, lender communication, and careful planning. That’s why we’ve put together this comprehensive guide, outlining everything Ohio homeowners need to know. You’ll learn how the payoff quote is figured out, what happens if the loan balance is higher than the sale price, and how to best protect your proceeds. With the right support at your side, a successful sale process is completely possible.
A reverse mortgage is a type of home equity loan aimed at older homeowners. It lets them convert part of their home equity into either a lump sum or monthly payments.
One common type of reverse mortgage is the home equity conversion mortgage, which is actually backed by the federal government. While the name may suggest the opposite, a homeowner with a reverse mortgage still owns the property, but the loan needs to be paid off either when the borrower sells the home, moves out of the primary residence, or passes away.
In Ohio, reverse mortgage borrowers must keep the home as their primary residence and remain current on property taxes, insurance, and association fees. Also, if a borrower moves into an assisted living facility for more than 12 months, the loan becomes due.
After notifying the lender, heirs typically have 30 days to confirm intent to repay or sell, with up to 6 months allowed to complete the sale under Ohio law and federal HECM guidelines.
Start by informing your loan servicer that you intend to sell your home. This triggers the formal process and ensures the lender knows the reverse mortgage loan will be paid off through the home sale.
Waiting too long to notify the servicer could delay the transaction or lead to unnecessary fees. Early communication also allows time to review your obligations, including any accrued interest, mortgage insurance, or unpaid property taxes associated with the loan.
Ask your servicer for a loan payoff quote in writing. This figure will include the full outstanding loan balance, along with any final charges or closing costs.
It’s important to understand this number before you accept any offer, especially if your reverse mortgage balance is higher than expected. The lender will calculate the amount based on the current appraised value and the terms of your non-recourse loan.
Next, decide how to market the home. Working with an experienced real estate agent may help you get a higher selling price, especially in a strong market. However, if time is tight or the property needs repairs, selling to a cash buyer can simplify the sale process.
Local cash buyers often specialize in buying properties with complex financing, such as reverse mortgage homes or inherited homes. Choose the route that fits your timeline, goals, and the condition of the property.
Once you receive offers, be sure that the final selling price is high enough to cover the loan payoff. If the offer is too low, you may need to negotiate, bring money to closing, or consider a short sale.
Most lenders will not approve the sale unless the sale proceeds cover the outstanding balance, or you have written approval for a lesser amount.
At closing, your title company will disburse the sale proceeds. The lender receives their portion first, which covers the reverse mortgage amount, interest, and any unpaid costs.
If there are remaining funds, those go to you. If the home sells for less than what is owed, the lender cannot demand additional payment beyond the fair market value due to the non-recourse loan structure.
After the sale closes, your lender will send a final payoff statement confirming that the loan balance has been cleared. The property title is transferred to the buyer, and any leftover funds are released to you. This wraps up your sale process.
Keep copies of all documents, especially if the home was sold for health reasons or inherited by family members, for future reference or tax reporting.
Before selling, you need to understand both how much you still owe on your reverse mortgage loan and also how much equity still remains in the home. The lender servicing your loan will create a payoff quote, which is what it will cost to pay off the loan in one lump sum.
Unlike selling a home with an existing mortgage, reverse mortgage sales require early communication with your lender. In some cases, sellers may also be required to pay prorated property taxes or homeowners’ insurance through the closing date.
If there is not enough equity to cover the full balance, your real estate attorney may help you explore options such as a short sale or deed-in-lieu agreement with the lender.
Sometimes, the home’s appraised value is less than your reverse mortgage balance. This might qualify your home for a short sale. This is where the lender agrees to take less than the full loan amount from the original regular mortgage. This generally needs the approval from your reverse mortgage lender, and you’ll need to accept an offer for fair market value.
Another option is a deed-in-lieu of foreclosure, which allows the borrower to transfer the property title directly to the lender to satisfy the outstanding loan. This can be a faster alternative to foreclosure proceedings, and it might help protect your record with the credit bureaus.
Some homeowners may also face the dual challenge of selling a home during bankruptcy while handling a reverse mortgage. In situations like these, timing, documentation, and lender communication become especially important.
Companies like H3 Homebuyers specialize in buying homes with complex situations. This includes homeowners who want to get out of their reverse mortgage early by selling. If your home is in good condition, and you want all the money possible from your property, working with an experienced real estate agent will typically be the best way.
They’ll help you price the home, market it, negotiate offers, and make sure everything meets the lender’s payoff requirements. That said, if you’re running short on time or if the property needs repairs of any severity, working with local investors may be a better route. Cash buyers won’t require any repairs and will usually cover the closing costs, so you can put more of the proceeds in your pocket.
This is important for family members of someone with a reverse mortgage loan. When a homeowner passes away with a reverse mortgage, the outstanding loan balance is then due. Heirs must decide whether to keep the home by paying off the loan or to sell the home and use whatever money remains to pay off the loan.
Because the loan is a non-recourse loan, the lender cannot pursue family members for more than the home’s value. Executors also need to move fast for a payoff quote. It’s also a good idea to work with a real estate attorney to manage the paperwork, like the title transfer, and to make sure everything is by the book.
Many homeowners unwittingly create delays in their home sale process by waiting too long to contact the loan servicer, or by listing the property before knowing their full reverse mortgage amount.
Some forget to keep up with ongoing commitments to pay property taxes, homeowners’ insurance, or HOA fees, any one of which can trigger early default on your loan.
Another widely common issue is underestimating the closing costs, or thinking that the sale process will be the same as with a traditional mortgage. Always be sure you verify the current appraised value before accepting an offer, before you ever even list the property.
If you need to sell your home fast in Dayton, understanding your loan terms and property value is essential. Avoid potential mistakes and delays by working closely with professionals and heeding professional advice. Ask questions early and review your loan terms very carefully.
Whether your goal is to move for health reasons, downsizing, or to access any remaining funds, a little planning can go a long way.
You can absolutely sell a house with a reverse mortgage in Ohio. The key is understanding your loan’s requirements, knowing your home’s market value, and taking the right steps to avoid delays. From dealing with an outstanding loan balance to navigating the process as an heir or looking to move quickly, the right support can simplify everything.
Proper guidance from a qualified real estate agent, real estate attorney, or a trusted cash buyer can change your whole experience. See how smooth, successful, and stress-free a home sale can be. H3 Homebuyers is standing by to give you the home sale process you deserve, from metro Cincinnati to anywhere else in the state.
