Can I Sell My House If I Have a Reverse Mortgage? A Calm Guide for Bakersfield and Morro Bay Homeowners

Can I sell my house in Bakersfield if I have a reverse mortgage? Yes, you can sell your home at any time, the reverse mortgage is paid off from the sale at closing, and any equity left over belongs to you. As a Seniors Real Estate Specialist (SRES®), I help longtime homeowners and their families through exactly this kind of sale, and it is usually much simpler than people fear once you know the steps.

Many homeowners I meet were told, years ago, that a reverse mortgage would let them stay in their home for life. That part is true. What is not always explained is what happens if life changes. Maybe the stairs are getting harder, a spouse has passed, the kids want you closer, or you are simply ready for a smaller, easier home. A reverse mortgage does not take away your choice to move.

Cyndi Clark-Amjadi is a REALTOR® and Seniors Real Estate Specialist (SRES®) with the Amjadi Zaben Trifecta Group in Bakersfield, California, helping longtime homeowners in Bakersfield and Morro Bay sell with clarity, honest advice, and no pressure.

The short answer

You still own your home when you have a reverse mortgage. The loan company has a lien on it, much like a regular mortgage. When you sell, escrow pays the loan company what is owed, and you receive whatever is left. Most reverse mortgages do not charge a penalty for paying off early. Your first step is simply to ask your loan company for a payoff statement so you know the real number.

What is a reverse mortgage, in plain words?

What is a reverse mortgage, and how is it different from a regular home loan? A reverse mortgage lets homeowners, usually 62 or older, borrow against the equity in their home without making a monthly mortgage payment. Instead of the balance going down each month, it slowly goes up, because interest and fees are added to the loan over time.

Most reverse mortgages are a type called a Home Equity Conversion Mortgage, or HECM, which is insured by the federal government through FHA. Some homeowners have a private, or "jumbo," reverse mortgage instead, which can have different rules. Your loan paperwork or your monthly statement will tell you which kind you have.

While you live in the home, you still need to keep three promises: pay your property taxes, keep your homeowners insurance in place, and take reasonable care of the house.

How does selling a home with a reverse mortgage work?

How do I sell my Bakersfield home if it has a reverse mortgage on it? The steps look a lot like any other sale, with one extra phone call at the start. Here is the order I usually walk my clients through.

1. Call your reverse mortgage loan company. This is the company you get statements from, sometimes called the servicer. Let them know you are thinking about selling.
2. Ask for a payoff statement. This shows exactly what it would take to pay off the loan on a certain date. Because the balance grows over time, the number will be a little higher each month.
3. Find out what your home is worth today. A local agent can prepare a free home value analysis based on recent sales near you.
4. Compare the two numbers. Your home's value, minus the payoff, minus the costs of selling, is roughly what you would walk away with. I can put this on a simple net sheet for you.
5. Prepare and list the home. I walk the home the way a contractor would and tell you plainly which repairs are worth doing and which are not. If a few repairs make sense, my own trusted subcontractors can handle them, so you do not have to manage anyone.
6. Accept an offer and open escrow. The escrow company requests an updated payoff directly from your loan company.
7. Close. At closing, the reverse mortgage is paid in full from the sale, and the remaining money goes to you.

What if I owe more than my house is worth?

What happens if my reverse mortgage balance is higher than what my Bakersfield home will sell for? For a federally insured HECM, you or your family generally will not owe the difference. These loans are "non-recourse," which means the debt is limited to the value of the home. When the loan is being paid off through a sale, HECM rules generally allow the home to sell for the lower of the full loan balance or 95% of its current appraised value, and the FHA insurance covers the gap.

This is one of the most comforting facts about a HECM, and one that many families do not know. Before you rely on it, please confirm the details with your loan company, because private reverse mortgages and special situations can work differently.

What should my family know if a parent has passed away or moved into care?

What happens to a reverse mortgage when a parent passes away or moves into assisted living? The loan usually becomes due. With a HECM, that generally happens when the last borrower passes away, sells the home, or has lived somewhere else, such as a care facility, for more than 12 months in a row.

Here is what families should know:

• The loan company will send a notice. Families are typically asked to respond within about 30 days to say what they plan to do: sell the home, keep it by paying off the loan, or sign it over to the lender.
• There is usually time to sell. Families often have up to six months to sell, and extensions may be possible when the home is actively on the market. The loan company sets these timelines, so keep in touch with them in writing.
• Leftover equity belongs to the heirs. If the home sells for more than the loan balance, the remaining money goes to the estate or the heirs, not to the loan company.
• A surviving spouse may have protections. If a spouse was not on the loan, newer HECM rules may allow them to stay in the home. This depends on when the loan was made and how it was set up, so ask the loan company directly.
• Trust or probate paperwork may come first. If the home is in a trust, the trustee can usually sell it. If not, the estate may need to go through probate before a sale can close.

If this is your family's situation right now, I am so sorry. Please know you do not have to sort it out all at once. Most families find it easier once they make that first call to the loan company and get the payoff number in hand.

Can I use a reverse mortgage to buy my next home?

Can I sell my current Bakersfield home and use a reverse mortgage to buy a smaller one? Yes, this can be possible. There is a version called a HECM for Purchase, which lets homeowners 62 and older buy a new home with a larger down payment and no monthly mortgage payment afterward. It is worth discussing with a reverse mortgage specialist and a financial advisor, because it is a big decision with long-term effects.

If you are thinking about downsizing, you may also want to look into California's Proposition 19, which can let homeowners 55 and older move their current property tax base to a new home. That can make a meaningful difference in your monthly budget.

Here is an example of how this can look

Picture a widow in her late seventies who has lived in her Bakersfield home for 35 years. She took out a reverse mortgage several years ago to help with living costs. Now her daughter lives in Morro Bay, and she would love to be closer. She assumes the reverse mortgage means she is stuck.

We start with one call to her loan company and get a payoff statement. Then we compare it with what similar homes nearby have recently sold for. She is relieved to see she still has meaningful equity. We choose a few small repairs worth doing, my subcontractors take care of them, and the home goes on the market on a timeline that fits her move. At closing, the loan is paid off and the remaining money goes toward her next chapter.

Every home and every loan is different, so your numbers will be your own. But the steps are usually this calm and this simple.

Common mistakes to avoid

• Assuming you cannot sell. A reverse mortgage does not take away your right to sell your home.
• Guessing at the loan balance. The balance grows every month. Always get a current payoff statement.
• Letting taxes or insurance lapse. Falling behind on these can cause the loan to come due early. If money is tight, call your loan company before it becomes a problem.
• Ignoring the loan company's letters after a loved one passes. Responding in writing, and on time, protects your family's options and your time to sell.
• Walking away from the house too soon. If there is equity left, it belongs to you or your family. Signing the home over to the lender may leave that money behind.
• Forgetting about taxes on the sale. Longtime owners may have large gains. A quick talk with a CPA about capital gains is worth it.

Frequently asked questions

Can I sell my house with a reverse mortgage at any time?

Can I sell my Bakersfield house with a reverse mortgage whenever I want? Yes. You can sell at any time. The loan is paid off from the sale at closing, and most reverse mortgages have no prepayment penalty.

Do I get any money when I sell a house with a reverse mortgage?

Do I get money back when I sell a home that has a reverse mortgage? Yes, if the home sells for more than the loan balance and the costs of selling. Whatever is left after the loan is paid off belongs to you.

Will my children have to pay off my reverse mortgage?

Will my kids have to pay my reverse mortgage out of their own pocket? With a federally insured HECM, generally no. The debt is limited to the home's value. Your children can sell the home to pay off the loan, keep the home by paying it off, or let it go to the lender.

How long do heirs have to sell a home with a reverse mortgage?

How long do heirs have to sell a house with a reverse mortgage after a parent passes away? For a HECM, heirs often have up to six months, with possible extensions if the home is being actively marketed. The loan company sets the exact timeline.

Does a reverse mortgage make my house harder to sell?

Does having a reverse mortgage make my Bakersfield home harder to sell? Not usually. Buyers do not take over the reverse mortgage. It is simply paid off at closing, just like a regular mortgage.

Who do I call first?

Who should I call first if I want to sell my home with a reverse mortgage? Start with your reverse mortgage loan company to request a payoff statement. Then talk with a local agent about what your home is worth today, so you can see both numbers side by side.

Would you like help seeing your numbers?

If you have a reverse mortgage and you are wondering whether moving is possible, or you are helping a parent sort through one, I am happy to sit down with you. We can look at your payoff statement and your home's value together, talk through what you would walk away with, and go at whatever pace feels right. There is no pressure and no obligation. It is simply a conversation.

Cyndi Clark-Amjadi is a REALTOR® and Seniors Real Estate Specialist (SRES®) with the Amjadi Zaben Trifecta Group, helping longtime homeowners in Bakersfield and Morro Bay understand their options and sell on their own terms.

You can call or text me at (661) 549-5933, or visit trifectagroupca.com.