If both your parents are alive when the reverse mortgage was signed, it will discuss the arrangements when the first parent passes on, probably not much happens at that point. But when the surviving parent passes on, the bank will expect a full payoff based on the terms of the contract they had with your parents. If the reverse mortgage only covered a portion of the value of the home, and your parents leave their remaining equity in the home to you, you would have to pay off the reverse mortgage to keep the house. you can do that with a new regular mortgage assuming you qualify for one. If not, the property will be sold to pay off the reverse mortgage.

The loan has to be re-paid when the last borrower on the reverse mortgage vacates the house. The heir then has two options – refinance the home into a new mortgage or sell the home to repay the reverse mortgage. The remaining equity (after the loan is paid off) goes to the heir.

The bank will want their money back.

The bank will expect the house to be sold. The new owner (which can be an heir) would have to come up with their own financing to buy the house.

Many heirs get the idea that they own the house when they don’t. The estate can’t give them clear title to the house until all debts have been paid.