How to Sell a House With a Reverse Mortgage in Missouri

Reverse mortgages have unique rules when it comes to selling. Here's what Missouri homeowners need to know.

Reverse mortgages allow seniors to convert home equity into cash without making monthly payments. But when it comes time to sell the home — whether by choice or necessity — the reverse mortgage adds complexity to the transaction.

How Reverse Mortgages Work

A reverse mortgage (most commonly an FHA Home Equity Conversion Mortgage, or HECM) allows homeowners 62 and older to borrow against their home equity. Unlike a traditional mortgage, no monthly payments are required. The loan balance grows over time as interest accrues. The loan becomes due when the borrower sells the home, moves out permanently, or passes away.

Selling a Home With a Reverse Mortgage

When you sell a home with a reverse mortgage, the loan balance (principal plus accrued interest) must be paid off at closing. If the home's value exceeds the loan balance, you receive the difference. If the loan balance exceeds the home's value (an 'underwater' reverse mortgage), FHA insurance covers the shortfall — you are not personally liable for the difference.

Timeline Considerations

Reverse mortgage servicers have specific procedures for handling sales, and the payoff process can take longer than a standard mortgage payoff. Allow extra time for the payoff quote and coordination with the servicer.

How We Handle Reverse Mortgage Sales

At Midwest Equity Advisors, we have experience buying homes with reverse mortgages. We work with the servicer to obtain the payoff amount and coordinate the closing timeline. We can often close quickly once the payoff information is received.