Case Study 2: Home Value Is More Than Loan Balance

Mr. Jones passes away after 15 years and his widow continues to live in their home without having to repay the loan balance. Five years later, she passes away, 20 years after

originally obtaining the reverse mortgage. The balance – principal plus interest – is now $395,000. Their children decide to sell the home. Their home appreciated and was

appraised at $550,000. The bank is paid the full loan balance of $395,000.Their children keep the remaining $155,000 ($550,000 minus $395,000), less home-selling expenses.