Disclaimer: We are not attorneys and this post does not constitute legal advice. Please consult a qualified attorney for guidance on your specific situation.
If you or a loved one has a reverse mortgage and you’re considering selling the home, you’re not alone. Many homeowners in Alabama find themselves needing to sell a house with a reverse mortgage due to life changes, downsizing, or financial hardship. While the process is different from a traditional sale, it is possible—and often necessary—to sell a home even with a reverse mortgage in place.
Here’s what you need to know if you’re thinking about selling a home with a reverse mortgage in Alabama.
What Is a Reverse Mortgage?
A reverse mortgage is a special type of loan available to homeowners age 62 or older. It allows you to access the equity in your home without having to make monthly mortgage payments. Instead of paying the lender each month, the lender pays you.
In Alabama, reverse mortgages are typically issued under the federally insured Home Equity Conversion Mortgage (HECM) program. The loan becomes due when the borrower passes away, moves out of the home, or sells the property.
Can You Sell a House with a Reverse Mortgage?
Yes, you can absolutely sell a house with a reverse mortgage. But when you do, the loan must be paid off in full at the time of the sale. If you sell the house for more than what’s owed on the loan, you or your heirs keep the remaining equity. If you sell it for less, and it’s a HECM loan, federal insurance usually covers the difference.
Common Reasons to Sell a Home with a Reverse Mortgage
- Moving closer to family or into assisted living
- Inability to maintain the home due to age or health
- The property has appreciated and you want to cash out equity
- The reverse mortgage balance is growing and you want to avoid foreclosure
How the Process Works in Alabama
- Contact the Loan Servicer
Let your reverse mortgage lender know you’re planning to sell. They’ll provide the payoff amount, which includes the loan balance and any interest or fees. - Determine the Home’s Value
You can get a market evaluation from a real estate agent, appraiser, or a local investor. This helps you know whether you’ll be able to pay off the loan with the proceeds. - List the Home or Sell Directly
You can list the property with an agent, sell it yourself (FSBO), or work with a local cash buyer to avoid repairs, commissions, and delays. - Use the Sale Proceeds to Pay Off the Reverse Mortgage
At closing, the title company will pay the lender directly from the sale proceeds. Any remaining equity goes to you or your heirs.
What Happens If You Owe More Than the House is Worth?
If your reverse mortgage is insured under the HECM program (which most are), you or your heirs won’t be responsible for any shortfall. The FHA insurance pays the difference so that you’re not left with debt you can’t repay.
Selling to a Cash Home Buyer in Alabama
For many Alabama homeowners with a reverse mortgage, selling to a cash buyer can simplify the process. You avoid repairs, showings, realtor commissions, and drawn-out closings. It’s especially helpful if you need to relocate quickly or don’t want the stress of preparing a home for sale.
At Morgan Matney Home Buyers, we work with homeowners in unique situations—including reverse mortgages. We’ll handle the details, coordinate with your lender, and make a fair cash offer for your home.
Next Steps
If you’re ready to sell a house with a reverse mortgage in Alabama, talk with your lender and a local title company. Then reach out to us for a no-obligation consultation. We’ll answer your questions and help guide you through the process with respect and care.
Disclaimer: We are not attorneys and this post does not constitute legal advice. Please consult a qualified attorney for guidance on your specific situation.