Can You Sell A House With a Reverse Mortgage in New York

Did you know that about 480,000 reverse mortgages are outstanding in the United States? Reverse mortgages are often advertised as a financial strategy for homeowners over 62 years old.

In this financial agreement, a homeowner relinquishes equity in their home for regular payments. Older adults may do this to supplement their retirement income.

A reverse mortgage can rise over time, unlike traditional loans that decline as you pay down the monthly fees. Although these loans are supposed to preserve housing stability for aging adults, they often end in foreclosure.

To avoid these complications, you might be looking to sell your home. Can you sell a house with a reverse mortgage in New York? Keep reading to find out.

can you sell a house with a reverse mortgage

Understanding Reverse Mortgages in New York

reverse mortgage, also known as a home equity conversion mortgage (HECM loan) allows homeowners 62 and older to convert home equity into tax-free income.

The property must be a primary residence and the lead borrower has to be at least 62. If a married couple, where only one borrower is of age, needs a reverse mortgage, the lead borrower must be 62 or older.

Anyone interested in a reverse mortgage must complete a counseling session to go over the benefits and risks of this type of loan.

Older adults take this type of loan because it doesn’t involve selling or handing over the title to a lender. The loan is backed by equity already put into the house.

A reverse mortgage means you aren’t required to make monthly mortgage payments any longer. However, you are responsible for paying for:

  • Loan down payment
  • Property taxes
  • Homeowners’ insurance
  • Home maintenance
  • Mortgage insurance premiums

You could use some of the equity in your reverse mortgage to pay these expenses.

An even bigger downside is that the balance of a negative amortization loan like a reverse mortgage is that the balance continues to grow. When you sell your house, the lender will have extra equity in the property.

Challenges Faced When Selling

There are three main challenges that sellers are faced with when they have a reverse mortgage:

  • Confusing process
  • Real estate transaction fees
  • Lost equity

If your home has lost value, it can be hard to work with your reverse mortgage lender to determine a fair listing price.

If you choose to work with a real estate agent, attorney, or other services, you’ll be required to pay their fees just as you would during a traditional home sale. You can lower your fees by finding a cash buyer in New York.

When you sell a home with a reverse mortgage, you have to pay off the full loan balance, including interest and fees. Because of this charge, you won’t get back your total equity.

Once you pay off your balance, you get to keep all the leftover amount. If your home appreciated over time, this could be a nice payday for you.

In contrast, if your home lost value over the years, you don’t have to pay the difference between the loan balance and the sale price. There may be a mismatch between this balance and the home’s market value.

In this scenario, it makes sense to sell a house fast to a cash buyer.

Do You Have a New Place to Live?

Older adults prefer to get a reverse mortgage so that they can stay in their homes as they age. If you end up having to sell the property, you need to have a new place to live lined up.

Make sure your new home is affordable and suitable for an aging adult. Paying off a reverse mortgage after you sell can leave you with little money for assisted living.

Some insurance policies cover costs related to assisted living. The Assisted Living Medicaid program in New York provides long-term care to those requiring a Nursing Home Level of Care.

Medicaid programs may cover a small portion of a private assisted living residence. Insurance can help offset the cost of finding a place to live after selling a home with a reverse mortgage.

cash house buyers with reverse mortgage

The Advantage of Cash Buyers

Cash buyers offer benefits from a quick home sale to hassle-free selling. In a situation where home selling is complicated, cash buyers can help remove your troubles. In addition to these benefits, you can make a no-repair home sale.

Find out how much you owe on your reverse mortgage by contacting your lender. Get the full payoff quote in writing to ensure the amount doesn’t rise once you sell the home to a cash buyer. 

Streamlined Solution Example

The process of selling your home through a cash buyer is simple. It requires only three basic steps:

  • Request your offer
  • We visit your property
  • Get your fair cash offer

When you work with We Buy Long Island Homes Fast, you don’t have to prepare your home for sale with marketing or open houses. Instead, you’ll call or fill out a form about your property and await a visit from us.

Our licensed professionals will finalize the paperwork and offer you a fair price. After that, you can collect your cash and use the proceeds to pay off your reverse mortgage.

This streamlined solution provides sellers with relief that they no longer have to worry about increasing their reverse mortgage balance.

If you are still hesitant to sell to a cash buyer, check out these actual reviews from people on Long Island who sold their homes to We Buy Long Island Homes Fast.

Sell Your Home With a Reverse Mortgage Now

Understanding how reverse mortgages work, especially when you sell your home, can help you improve your financial situation. Instead of continuing to increase your loan balance, sell your home fast with us.

At We Buy Long Island Homes Fast, we prioritize transparency and honesty when we offer cash for your home. There’s no need for agent fees, commissions, or repairs.

We have solutions for reverse mortgage situations and foreclosure. It’s quick, easy, and feasible to sell your home to a cash buyer. Reach out to us today for a no-obligation cash offer.

easy house sale with reverse mortgage