Receiving an inherited house should be a wonderful surprise, but finding out it has a reverse mortgage can feel like a race against time. If you’ve just inherited a home in New Jersey with a reverse mortgage, you’re probably feeling a bit overwhelmed by the choices you need to make. Don’t worry, we’re here to help you understand your options and why it’s so important to act fast.
A reverse mortgage, like the popular FHA-insured Home Equity Conversion Mortgage (HECM), lets homeowners who are 62 or older turn their home equity into cash without having to make monthly mortgage payments. The loan balance actually goes up over time as interest is added.
When the homeowner passes away, the loan needs to be repaid. Heirs usually have about 30 days to decide what to do and then up to six months to handle it. Sometimes, you can get an extension if you’re actively trying to sell or refinance, but it’s not a guarantee.
Family meeting to discuss inherited property options
1. Keep the House by Paying Off the Loan
If you want to keep the house, you’ll need to pay off the reverse mortgage. You can do this with your own savings, by getting a new mortgage, or through other financing. If the loan is more than the house is worth, you can buy it for 95% of its current value, which is a special feature of HECM loans.
2. Sell the House and Keep the Equity
This is what most heirs choose to do. You sell the house, pay off the loan, and any money left over is yours to keep. If the house is worth less than what’s owed, the FHA insurance will cover the difference, so you won’t have to pay anything out of pocket. The Consumer Financial Protection Bureau (CFPB) has more great info on this.
3. Walk Away
If the loan is more than the house is worth and you don’t want to deal with it, you can give the house back to the lender. This is called a “deed in lieu of foreclosure.” Since HECM loans are “non-recourse,” you won’t owe any extra money.
HUD/HECM timeline and documentation graphic
The timeline for dealing with a reverse mortgage is what makes it so stressful. Here’s a quick look at how it usually goes:
All this time, interest is still being added to the loan, which means less money for you in the end. The longer you wait, the more the loan grows.
Trying to sell a house the traditional way can take a long time, and you might miss the lender’s deadline. A direct cash sale to Holly Nance Group is a great solution. We can close in as little as 7 days, so you don’t have to worry about the clock ticking. We buy houses in any condition, take care of all the paperwork, and work with the loan servicer to make sure everything goes smoothly.
We have a lot of experience helping families in New Jersey with inherited properties and probate, even when there’s a reverse mortgage involved.
Will I owe money if the reverse mortgage is more than the house is worth?
Nope! HECM reverse mortgages are non-recourse loans, so you’ll never owe more than the home’s value. If the loan balance is higher than the sale price, the FHA insurance covers it.
Can I rent out the house while I figure things out?
Usually not. Once the homeowner is no longer living in the house, the loan is due. The lender will expect you to take care of it within the set timeline, not turn it into a rental.
Do I have to go through probate first?
In most cases, yes. The estate needs to go through probate to get the legal authority to sell the property. But you can start working with a buyer like us during probate so you’re ready to go as soon as the court gives the green light.
What if there are multiple heirs?
All the heirs will need to agree on what to do. A cash sale can make this easier by giving everyone a fast and fair payout.
Give Holly Nance Group a call at (609) 473-3370 or get your free cash offer online. We know how urgent these situations are and can help you close before the deadline.
Inherited a reverse mortgage? Don’t let time run out. We’re here for you.
Holly Nance Group, Your trusted local New Jersey cash home buyer since 2012.
Helping New Jersey & Pennsylvania homeowners sell with clarity, confidence, and speed. No matter how complicated it gets.
