Most homeowners who take out a reverse mortgage plan to stay in their home for many years—often for the rest of their lives. However, life doesn’t always follow a set plan. Sometimes homeowners decide to move closer to family, downsize, or relocate for health or lifestyle reasons.

If you have a reverse mortgage and decide to sell your home before the loan becomes due, the process is generally straightforward. Selling a home with a reverse mortgage works much like selling a home with a traditional mortgage. The main difference is that the reverse mortgage must be paid off as part of the sale.

Here’s what the process typically looks like.

Step 1: Review Your Loan Documents

Start by locating your reverse mortgage loan documents so you can review the terms of your loan. While many reverse mortgages are federally insured through the FHA’s Home Equity Conversion Mortgage (HECM) program, loan details can vary depending on the lender.

One important feature of FHA-insured reverse mortgages is that they are non-recourse loans. This means that even if the loan balance eventually exceeds the home’s value, neither you nor your heirs will ever owe more than the home is worth when it is sold.

If you’re unsure about any of the terms, it may be helpful to consult with your lender or a real estate or elder law professional.

Step 2: Request a Payoff Quote

Next, contact your reverse mortgage servicer and request a payoff statement. This document shows the total amount currently owed on the loan, including any accrued interest and fees.

Having an accurate payoff figure will help you estimate how much equity may remain after the sale of the home.

Step 3: Work With an Experienced Real Estate Agent

While selling a home with a reverse mortgage is not uncommon, it can be helpful to work with a real estate agent who understands how the process works. Be sure to let your agent know up front that the home has a reverse mortgage so they can coordinate the payoff with the lender during the closing process.

Step 4: Prepare the Home for Sale

From this point forward, the process looks very similar to any other home sale. Preparing the home for listing may include decluttering, cleaning, addressing minor repairs, and staging the home so it shows well to potential buyers.

A local real estate professional can help guide you through pricing and marketing strategies.

Step 5: Complete the Sale

Once the home sells, the reverse mortgage is paid off from the proceeds at closing. If the sale price is higher than the loan balance, the remaining funds belong to you.

Many homeowners are surprised to learn that selling a home with a reverse mortgage can be just as simple as selling a home with a traditional loan.

A reverse mortgage does not lock you into your home forever. Homeowners remain free to sell their property at any time if their plans or circumstances change. As with any real estate transaction, the key is understanding the process and working with professionals who are familiar with reverse mortgages.

For many seniors across Colorado, this flexibility is one of the reasons reverse mortgages continue to be a valuable option in retirement planning.

Jan and Kelsey are Reverse Mortgage Specialists serving the Erie, Dacono, Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming.  Contact Jan and Kelsey to learn if a reverse mortgage is right for you.