My mother has a reverse mortgage on her home. Can pay on the mortgage or buy the house from her?

Just like a regular real estate deal. Contract, purchase, closing, mortgage.

Her loan has a payoff, but the payoff should be less than the value. So after you determinprice value you need to offer Mom a price.

No.

In case the senior citizen or individual with reverse mortgage can sell his home, then he can purchase a smaller or larger home in case he wishes to. The original home should be paid off with reverse mortgage depending on the loan amount and only he will be eligible to sell his house. If an individual wants to sell his house then he should pay the full loan amount that is received first. The idea is not favorable as one may not be able to pay off the whole loan amount, hence most of them don’t opt for selling their house.

So if you want to buy the house from her she will have to pay it off first. You can’t get a loan because it isn’t your house.

And pay no attention to the uninformed who say it’s just a simple sale. This is a house with major encumbrances. I suggest you talk to the lending institution that’s involved with her reverse mortgage.

I hate reverse mortgages, they are horrible. You will soon find that out.

This is very straight forward and a reverse mortgage is not the La Brea Tar Pits of real estate. You are a buyer, your mom is the seller, as such she is the owner. The reverse mortgage has a pay-off amount.

All that has to happen is for you and your mom to come to an agreement as to price. That price, not surprisingly has to be more than the amount of the outstanding reverse mortgage, or the deal cannot close without lots of problems.

Assuming you need your own mortgage to afford to buy the house, at closing your mortgage company would pay off the reverse mortgage, you get the deed from mom and faster than you can say, “bob’s your uncle”, your done.

None of this advice has any relevance to the important issues as to whether this is a good idea for you, your mom, other family members, etc. etc.

Hi, Greg. You asked 3 questions. You didn’t say how much is owed and if the home is worth more than the loan, or how old you are.

1) Can you pay on the mortgage? You could, but it would not give you any rights or ownership to the house. For as long as your mom is alive and has the reverse mortgage (RM), she cannot put you on title. If you have siblings, and you choose to go this route, I would strongly recommend you put something official on paper so that when she passes away, you have documentation showing how much you have paid against it. You may or may not be able to put a lien on it, as FHA doesn’t not allow 2nd mortgages during the loan process. There is a bit of information online. I would recommend a lawyer, or an organization that specializes in this, and make sure she at least has a will, or better yet a trust. Offer to pay for it if she can’t, since it would benefit you mostly.

2) Can you buy the house from her? You could. But as with any loan or lien against the home, the reverse mortgage (RM) would have to be paid off first during close of escrow before title could be transferred to you. Assuming the home is worth more than the loan payoff, your mother would keep the net proceeds, and either move out or live with you. She may have to pay taxes on any profit. You would now have monthly mortgage payments; unless you are over 62 yourself, and qualify for your own reverse mortgage.

If the home is underwater and she owes more than the home is worth, then it gets tricky. Previously a sale could only be an arms-length transaction (not to a relative) if she is still alive and the lender were to agree to a short sale (i.e. accepts less that the full payoff amount). But if she has already passed away, you can purchase it for whatever is lower: 95% of the appraised value or the payoff amount.

3) Can you get a loan to pay hers off? You can only get a loan when you already own the property or if you are buying it off her (see #2). A bank will not loan you that kind of money if it is not secured by real estate. And even with owning real estate, in today’s market, you would probably need to have a regular job and good credit. Or be over 62 and get your own RM.

As a suggestion, assuming your mother wants you to have the home, if she is young enough to make it worthwhile, you may want to buy life insurance on her, and when your mom passes away, the life insurance pays off the RM and you can inherit the home free and clear. But as with everything else, make sure you have everything documented and publicly known; especially if there are other relatives who may be interested in the home.