How to Pay Back a Reverse Mortgage

Reverse mortgages can be confusing, especially when it's time for repayment. 

If you're wondering how to pay back a reverse mortgage, the answer depends on your situation and what event triggered the repayment. Learn everything you need to know as a reverse mortgage holder or heir. 

How a reverse mortgage repayment actually works

Reverse mortgage repayment doesn't happen in monthly installments. When the balance comes due, the homeowner or their estate settles the loan in full. To understand the costs, use our mortgage calculator or the mortgage amortization guide to estimate how interest compounds over time.

Selling the home to cover the balance

The most common way to handle a reverse mortgage is to sell the home. Once the home is sold, the loan balance is paid off with the proceeds. If there is any remaining equity, it goes to the homeowner or their heirs.

Paying off the loan to keep the home

If you are the homeowner or heir and want to keep the property, you can pay back the reverse mortgage. Your options include refinancing into a traditional mortgage, paying in cash using savings, or allocating proceeds from other assets.

What happens if the loan balance is more than the home's value?

One of the unique features of reverse mortgages is that they are nonrecourse loans. You or your heirs won't ever owe more than what the home is worth.

Common situations that trigger repayment

When the borrower leaves the home, sells it, or passes away, the reverse mortgage will become due. There are no installment options with a reverse mortgage. 

Build credit to improve mortgage eligibility 

If you will have to take out a loan to pay off a reverse mortgage anytime soon, you may need to work on improving your eligibility by strengthening your credit score and building your credit. Platforms like Kikoff have tools that help you add positive payment history to boost your credit score.

Build credit responsibly with Kikoff's plans.