How to Undo a Reverse Mortgage

Reverse mortgages are designed to provide extra money for seniors with home equity.

A reverse mortgage is a special loan type that is available to homeowners who are 62 years of age or older. Money is borrowed against the equity in your home and is distributed through payments sent to the homeowner at regular intervals. Reverse mortgages are also associated with high fees and potential impact on assets after a homeowner's death, so some homeowners have second thoughts and want to undo their reverse mortgage before they start receiving payments.

Step 1

Inform the lender who issued the reverse mortgage in writing that you want to cancel the loan. This generally must be done within three business days of the loan closing. If mailing the request, send it using certified mail with a return receipt requested so that you can confirm when the request is accepted and who accepts it. Some lenders have cancellation forms that you can use to make your request, while others require you to write your request yourself.

Step 2

Consult your reverse mortgage contract if it has been more than three business days and you are unable to cancel the loan without penalty. The contract should include a cancellation clause detailing what penalties may be applied for early loan termination and the process by which you or the lender may cancel the loan.

Step 3

Contact the lender who issued the reverse mortgage and inform them that you wish to pay off the loan and terminate the loan contract. You will have to repay any money that has been paid out from the loan as well as any fines or other fees associated with early termination, as stated by the loan contract. You will also have to pay any interest that has accrued on the amount already paid.


If you are unable to pay off the amount due on a reverse mortgage, most lenders allow you to take out a standard "forward" mortgage for the amount owed; you then can begin making monthly loan payments to pay off the amount that has been borrowed.