Can Children Inherit Property Entailed in a Reverse Mortgage?

A homeowner can use part or all of his home's equity for a reverse mortgage.

A reverse mortgage is a home loan which allows an individual to borrow against his home's equity. Repayment starts when the home is no longer the primary residence or the homeowner dies. A homeowner's children can inherit the home with conditions.

Significance

A homeowner's children can inherit their parents' primary residence even with a reverse mortgage attached. However, they also inherit the obligation to repay the lender.

Considerations

A reverse mortgage must be repaid. According to the U.S. Housing Urban Development (HUD), the money from the reverse mortgage, the interest and any fees are repaid to the lender. The fees and interest continue to compound even after the homeowner's death.

Warning

The children who inherit the home must pay off the reverse mortgage as soon as they can. According to the AARP, if the decedent's estate or the children who inherit the property cannot repay or refinance, they may have to sell the home to pay off the reverse mortgage.

References

• AARP: Ask the Experts
• U.S. Housing Urban Development: Top Ten Things to Know if You're Interested in a Reverse Mortgage