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What happens if my reverse mortgage loan balance grows larger than the value of my home?

If your loan balance is more than the value of your home, you or your heirs may not have to pay the difference.

If you owe more than your home is worth, but sell your home for the appraised fair market value, the remaining balance will be paid by mortgage insurance.  

When the last remaining borrower passes away, the loan has to be repaid. Most heirs will repay the loan by selling the home. If your loan balance is more than the value of your home, your heirs won’t have to pay more than 95 percent of the appraised value. The remaining balance of the loan is covered by mortgage insurance.

Note: This information only applies to Home Equity Conversion Mortgages (HECMs), which are the most common type of reverse mortgage loan.


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