As an important part of planning for your retirement, you should do some preparations to be financially stable. However, with longer life expectancy and the costs of living rising, you could still find yourself short on funds.

Now, one of the best solutions to ensure your retirement is enjoyable is a reverse mortgage. In a way, you can use it to supplement your retirement funds. It is important to do your research and look at the various home equity conversion mortgage pros and cons.

In this article, we will have reverse mortgage explained and offer some information on how to sell a property with such an outstanding loan.

What Is a Reverse Mortgage

Basically, a reverse mortgage is a type of loan that is granted to people who are 62 years or older and have a considerable amount of equity on their property. These people can borrow against their home’s value and will receive the money through fixed monthly payments, a lump sum, or a line of credit.

How Does It Work

This type of home loan agreement works by using a lump of your property’s equity to pay off your existing mortgage balance. And, you do not have to make any loan payments to pay off your debt, unlike traditional forward mortgages. Instead, your entire loan balance will become due when you pass on, move to another place permanently, or sell your home. However, the monthly interests are added to your total loan balance.

When you have paid off your existing mortgage balance, your lender will pay you the remaining proceeds from your new loan. You will also have the privilege to choose how you will receive the money.   

With reverse mortgage explained, it will be easier for you to make smart decisions when selling your property.

How to Sell a Home with a Reverse Mortgage

Due to the stipulations that come with a reverse mortgage, selling a home with such a type of loan can be more complicated than selling one with a traditional mortgage. Still, it can be done with proper knowledge and planning.

Here are the fundamental steps to selling a property with a reverse mortgage.

1. Know how much you owe.

Typically, you should already have a solid knowledge of how much money you are getting from your reverse mortgage. When you took out the loan, you should have used a reverse mortgage calculator and spoken with your lender about how much you owe and what are the fees that you have to pay should you sell your home.

2. Get an appraisal.

Having your home appraised is a must to determine your property’s fair market value. This is important especially when the appraisal is lesser than what you owe on your reverse mortgage, where your lender will have to approve to receive lower amounts to satisfy your loan.      

3. Hire a real estate agent.

An agent is the best person to help you with determining the market value of your home. The information you can get from them will be very useful in understanding if the proceeds from the home sale will be enough to pay off your mortgage balance.  

4. Consult a real estate lawyer.

The process of selling a home with a reverse mortgage and paying off the loan can be very intricate. An attorney who specializes in real estate can help ensure all payments are carried out correctly and lawfully.

5. Prepare your home for listing.

Like any other home seller, you would like your property to sell quickly for a good profit. This is where the magic of hiring an agent also comes into play.

Your agent can help prepare your house, take good photographs, put it up on listings for reverse mortgage homes for sale, and coordinate showings for potential buyers. Aside from these, they can also help you set the right price that is close to or more than the appraised value. This ensures you will be able to cover your existing loan balance.

6. Wrap things up.

Once you have closed the sale, you can now proceed to pay off your reverse mortgage. Contact your lender, tell them that you are all set, and close your account.

If you have sold your property at a high price, then most likely you will receive excess money once you pay off your loan.

Mistakes to Avoid When Selling a Home with a Reverse Mortgage    

While you can always sell a home with a reverse mortgage, there are things to keep in mind to close a favorable sale. Three of the major mistakes that you have to avoid are:

  • Selling your property too soon
  • Agreeing to sell your property when its value has fallen
  • Not sticking to the plan you set with your agent

Still, there could be more to this type of sale depending on the type of property you have and your financial situation. So, take the time to do proper research about selling a home with a reverse mortgage.

Who Are Eligible for This Type of Loan

According to the reverse mortgage rules set by the Department of Housing and Urban Development (HUD), you will be eligible for a reverse mortgage if you own a home that is constructed after the 15th of June 1976. Also, those who own cooperative housing units cannot obtain such a loan because, technically speaking, they do not own the homes they are living in.

Regardless, here are the general criteria to qualify for this type of loan.

For the Homeowner

  • 62 years old or above
  • Must have enough equity in their home
  • Able to attend counseling sessions by the HUD
  • Have gone through a financial assessment that proves they are in the best position to be successful with their loan

For the Home

  • Must be a primary residence
  • Still in good condition to meet the standards set by the Federal Housing Administration
  • Should not be a mobile home
  • Must be on the condo list approved by the HUD (for condominiums)


With reverse mortgage explained, you will now be well-informed and can make wise decisions when you sell your property with such type of loan. However, you should have the right strategy in place. It will only be fruitful when you understand how the loan works and what trade-offs are involved.

By educating yourself and seeking help from the experts, you can live out your golden years in the most comfortable and enjoyable manner.

For more interesting tips and information that you can use to make your life better, read our other articles!