No!  Ownership of the home is retained with a reverse mortgage. The homeowner maintains the title to the property, and the lender holds a lien on the home to secure the loan.

Instead of making monthly payments to a lender, the lender makes payments to you. These funds can be received as a lump sum, a line of credit, monthly payments, or a combination. The loan, plus accrued interest and fees, becomes due when the home is sold, the borrower moves out, or passes away. 

To qualify, the borrower typically needs to be 62 years or older, own the home outright or have a small mortgage balance, live in the home as the primary residence, and have the financial resources to pay for ongoing property taxes, insurance, and maintenance. Counseling from a HUD-approved agency is also required. 

The amount that can be borrowed depends on factors like age, the appraised value of the home, and current interest rates. 

When the home is sold, the borrower moves out, or passes away, the loan balance (including principal, interest, and fees) becomes due. The loan can be repaid by selling the home, refinancing, or using other assets. 

Yes!  The heirs can inherit the home, but they will be responsible for repaying the outstanding loan balance. They can choose to sell the home, pay off the loan to keep it, or turn it over to the lender.  If the heirs elect to sell the home, any remaining equity will belong to the heirs.  The non-recourse feature insures the heirs of never owing more on the home than the value of the home when the loan is repaid; therefore you don’t need to be concerned about leaving a debt to your heirs.

Reverse mortgages have upfront costs like origination fees, mortgage insurance premiums, appraisal fees, and other closing costs. Interest and mortgage insurance also accrue over the life of the loan.

Pros include the ability to access home equity without monthly payments, potentially tax-free income, and the ability to age in place. Cons include the potential for a smaller inheritance for heirs.

Whether a reverse mortgage is right for you depends on individual circumstances, and your financial needs, and goals. It’s important to carefully consider options, weigh the pros and cons, and understand the program fully before making a decision.

Fact: As long as you live in the home as your primary residence, pay property taxes and homeowner’s insurance, and maintain the home, you cannot be forced out due to the reverse mortgage.

Fact: HECMs are non-recourse loans, meaning neither you nor your heirs are responsible for repaying more than the home’s value when the loan becomes due.

Fact: Reverse mortgages can be a strategic financial tool for seniors to supplement retirement income, pay off debts, or even purchase a new home.

Fact: Only one spouse needs to be 62 or older to qualify, though both spouses’ ages can impact the loan amount and terms.

Fact: HECMs are insured by the Federal Housing Administration (FHA) but are loans from private lenders, not government benefits.

Fact: You can use the loan proceeds for any purpose, including home repairs, healthcare expenses, or supplementing income.

Fact: While there are costs associated with HECMs, including mortgage insurance premiums and closing costs, they can be a cost-effective way to access home equity and eliminate monthly mortgage payments. 

Fact: Proceeds from a reverse mortgage are not considered income and will not affect your Social Security or Medicare benefits.