Taking a reverse mortgage loan is often a long-term financial commitment that lasts until the borrower passes away. But though these loans are commonly most advantageous to borrowers who stay in them for many years, all borrowers have the option of repaying their reverse mortgages without penalty at any time.

When must borrowers repay a reverse mortgage?

Sometimes, repaying a reverse mortgage is less a choice than a function of circumstances. In addition to the death of the last borrower on the loan, the terms of a reverse mortgage specify several maturing events that will result in the new loan coming due. These include but are not limited to:

• Selling the home
• Refinancing the loan

In either of these situations, the balance of the reverse can usually be repaid with proceeds from the home sale or the new loan.

Other maturing events that result from borrowers not meeting the terms of their loan may result in foreclosure. These include but are not limited to:

• Moving out or no longer occupying the home as a primary residence,
• Failing to maintain the home,
• Failing to pay property taxes, insurance, and other home-related fees.

Why would someone choose to repay a reverse mortgage early? 

When financial circumstances allow, a reverse mortgage borrower may choose to settle their debt without the trigger of a maturing event. The reasons for doing this can vary. Some people may wish to pass their homes to their heirs free and clear. While heirs do not inherit debt from a reverse mortgage, the deceased’s estate does need to settle the loan. Repaying the loan in advance is one way to ease the heirs’ responsibility. Other borrowers may find that their financial situation and plans have changed and that paying back the loan makes sense for them. Regardless of why they choose to pay back their reverse mortgage, it is important to know that at any time during the life of the loan they may pay it back without penalty.