Q. I have a reverse mortgage but the value of my home has dropped significantly. My children want to keep my home after I die. Will they have to pay off the mortgage balance, even if it's higher than the market value of the home?
A. Reverse mortgages offer older homeowners a way to tap home equity to meet financial needs in retirement. Borrowers are not required to make monthly payments to repay the loan. Instead, they receive payments, often month to month, that cause the loan balance to increase over time. The loan becomes due when the homeowner dies, moves or sells the home.
Under current lending policy, if your house declines in value, and the balance of the reverse mortgage becomes higher than the home's market value, your children would still be required to repay the full balance if they wanted to keep the home.