Will a reverse mortgage continue to accrue interest even during probate?
You should discuss this with the reverse mortgage lender, as terms and conditions will vary.
Generally, though, the interest on a reverse mortgage is due when the house is sold, so if there's a time delay between the death of your parent and the sale of the house, the estate is responsible for the increased interest on the loan, just as it would be for any mortgage payments due on a traditional mortgage.
The answer above is correct. One obtains the payoff for a Reverse Mortgage the same way as for any other - by contacting the servicing lender.
The only activities or questions to consider "up front" are these :
1) Does the family intend to keep the home :
Many folks don't know this, but while HUD/FHA Insurance on a Reverse Mortgage protects the OWNERS against a shortfall, it DOES NOT protect the heirs IF THEY DECIDE TO KEEP THE HOUSE.
Yes, the Heirs can pay off the loan, but they are responsible for the ENTIRE BALANCE, even if that Balance exceeds the home's worth after the cost of the sale.
2) What is the status of the Reverse Mortgage obligation; Is the home likely to be "Short" once sold.
If SO, there are steps one can take IN ADVANCE so that shortage is not considered INCOME back against the estate.
At the time the home is no longer occupied, should their be no equity, is is acceptable to simply turn the home over to HUD.
It would not make sense for the heirs to spend their time and effort in fixing up a home to "sale quality", and investing the time and effort in the sale if there was no benefit to them.
I should note that their are TWO METHODS to have the home remain outside of probate.
A) A Living Trust [Usually used when there are other Assets.]
or
B) A Life Estate Deed [Usuallly used when the home is really the only signifcant Asset.]
In either case, the home passes to the parties specified WITHOUT PROBATE, allowing for a quicker sale and less loss of equity.
