When does repayment become due?

Repayment typically becomes due after one of these events: the borrower dies, permanently moves out, or sells the home. The loan also becomes due if the borrower fails to meet obligations such as keeping the property insured, paying property taxes, or maintaining the home (HUD; CFPB).

Servicers will send a formal demand for payment to the estate or heirs. In practice, heirs usually have time to decide whether to sell, refinance, or repay — most servicers provide at least a six-month period and may grant extensions on request (contact the servicer for the exact timeline).

Heirs’ primary repayment options

  1. Sell the home to repay the loan
  • The most common route. Proceeds first pay the reverse mortgage balance, sale costs, and any senior liens. Any remaining equity goes to the estate or heirs.
  1. Keep the home by repaying or refinancing
  • Heirs who want the property can pay off the reverse mortgage using personal funds or by refinancing into a forward mortgage if they qualify. Consult mortgage lenders early — qualifying rules differ from reverse loans.
  1. Convey the property to the lender or allow foreclosure
  • If heirs do nothing or cannot pay, the servicer will ultimately repossess and sell the home to satisfy the loan. Because most reverse mortgages are non-recourse, heirs and the estate won’t owe more than the home’s value at sale (HUD; CFPB).
  1. Short sale or deed-in-lieu (less common)
  • Some servicers will accept a deed-in-lieu of foreclosure or negotiate a short sale if the home’s value is below the loan balance. Ask the servicer about loss-mitigation options.

Practical timeline and servicer interactions

  • Ask the servicer for a written payoff demand and an itemized statement of the loan balance and accrued interest. Get a copy of the mortgage note and annual statements.
  • Confirm how long you have to market the property. Most servicers permit several months to sell; extensions are available but not guaranteed.
  • If you plan to keep the home, get a current appraisal and speak with a lender about refinancing costs and qualification rules.

Tax and estate considerations

  • Proceeds from a sale used to repay the mortgage generally go to the estate; the reverse mortgage payoff itself is not taxable income to heirs (consult a tax advisor).
  • If the estate must sell the home, capital gains rules may apply based on the home’s basis and sale price. Always check with an accountant or estate attorney for your situation.

Common mistakes heirs make

  • Waiting to contact the servicer. That can reduce options and shorten marketing time.
  • Assuming personal liability beyond the home’s value. Most HECM reverse mortgages are non-recourse; heirs are not personally on the hook for the shortfall (HUD).
  • Not checking for other liens or unpaid taxes that can complicate the sale.

Quick checklist for heirs

  • Locate loan documents and contact the loan servicer immediately.
  • Request a payoff demand, recent statements, and the property’s estimated market value.
  • Decide whether to sell, refinance, or repay (get cost estimates for each).
  • Consult a real estate agent experienced with estates and a tax advisor or estate attorney.

Real-world context and tips

In my practice I often tell families to start with the servicer call. You’ll get the payoff figure and learn the exact timeline. Selling is usually the simplest route; refinancing keeps property in the family but requires qualifying for a new mortgage. If the estate needs time, ask the servicer for a marketing period or extension in writing.

Additional resources

Authoritative sources: HUD HECM program (https://www.hud.gov/program_offices/housing/sfh/hecm) and CFPB consumer page on reverse mortgages (https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/). For complex situations, consult a qualified estate attorney or certified financial planner.

Professional disclaimer: This entry is an educational overview, not legal or financial advice. Individual circumstances vary—seek advice from a licensed attorney, tax professional, or financial advisor before acting.