Reverse Mortgages - what happens after the borrowers pass away?

DDA Mortgage • May 23, 2022

What happens to your reverse mortgage if you die? Does the bank get the home?  What does non recourse mean on a Reverse Mortgage? What happens if there is lots of equity? What happens if your home is upside down?


Let's explain, what happens to a reverse mortgage after a borrower passes away.


Reverse mortgages are non-recourse loans. This means that if the borrower owes more than the home is worth, the bank cannot go after your heirs for the difference. The bank does not have recourse to assets outside of your home for any remaining debt. If you owe more than the home is worth, your heirs have two choices. Walkaway from the home and the debt, or pay off the loan and keep the house.


For example, let's say your home is worth $400,000, you take out a reverse mortgage, and the value of your home drops to $250,000 because of market conditions. Your reverse mortgage is not affected by this shift, and if something happens where you owe more than the home is worth, you or your heirs are not responsible for the difference between what is owed and what the home is worth.


If there is equity in the home, heirs have two choices.

  • Refinance the home, pay off the loan, and keep the house.
  • Sell the home, pay off the loan, and keep the profits.


Reverse mortgages are a great option for seniors because they protect you and your heirs from changes in the market. Reverse mortgages are an amazing alternative to conventional loans.


If you would like to speak to a Reverse Mortgage advisor, give us a call (727) 784-5555. Or use our form below to ask a question.


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