Reverse Mortgage Information
Your Top Reverse Mortgage Questions, Answered
Considering a reverse mortgage but not sure if it’s the right financial option for you? You’re not alone.
Many homeowners age 62+ explore reverse mortgages to access home equity and support retirement goals, cover everyday expenses, pay for home improvements, or fund major life costs.
To help you make an informed decision, we’ve compiled clear answers to the most frequently asked questions about reverse mortgages.
Reverse Mortgage FAQs
What Is A Reverse Mortgage?
A reverse mortgage is a type of loan available to homeowners age 62 and older. Unlike a traditional mortgage, where you make monthly payments to the lender, a reverse mortgage allows you to convert part of your home equity into cash.
You can receive funds as a lump sum, monthly payments, or a line of credit, depending on the loan and your goals.
How Does A Reverse Mortgage Work?
When you take out a reverse mortgage, the lender pays you based on a percentage of your home’s value. The amount you may be eligible to borrow depends on your age, your home value, and current interest rates. Repayment is typically not required until you sell the home, move out permanently, pass away, or no longer meet loan requirements. At that point, the loan balance, including interest and fees, becomes due.
What Are The Eligibility Requirements For A Reverse Mortgage?
To qualify for a reverse mortgage, you generally must:
- Be at least 62 years old.
- Own your home outright or have a low mortgage balance that can be paid off with proceeds from the reverse mortgage.
- Live in the home as your primary residence.
- Stay current on property taxes and homeowner’s insurance, and maintain the home.
Want a quick estimate? Use our reverse mortgage calculator to check potential eligibility and available funds.
What Are The Different Types Of Reverse Mortgages?
There are three main types of reverse mortgages:
- Home Equity Conversion Mortgage (HECM): The most common type, insured by the Federal Housing Administration (FHA).
- Proprietary Reverse Mortgages: Private loans offered by individual lenders, often designed for higher-valued homes.
- Single-Purpose Reverse Mortgages: Offered by some state and local agencies and nonprofit organizations for specific purposes (such as home repairs or property taxes).
How Much Can I Borrow With A Reverse Mortgage?
The amount you can borrow depends on several factors:
- Your age (older borrowers may qualify for more).
- The value of your home.
- Current interest rates.
- The reverse mortgage program and payout option you choose.
What Are The Costs Associated With A Reverse Mortgage?
Reverse mortgages may include the following costs:
- Origination fees.
- Mortgage insurance premiums (for HECMs).
- Closing costs.
- Servicing fees (if applicable).
- Interest.
These costs are commonly financed into the loan, meaning they may be added to the loan balance.
Will I Still Own My Home With A Reverse Mortgage?
Yes. You retain ownership of your home with a reverse mortgage. You must continue paying property taxes and homeowner’s insurance and maintain the home. If you do not meet these obligations, the loan can become due and payable.
What Happens If I Outlive The Loan Proceeds?
If you outlive the proceeds from a lump sum or monthly payout, you are not required to move out of your home. If you chose a line of credit, you may still be able to access unused available funds (subject to the loan terms).
How Will A Reverse Mortgage Affect My Heirs?
When you pass away, your heirs generally have several options:
- Repay the loan balance and keep the home.
- Sell the home and use the proceeds to repay the loan, keeping any remaining equity.
- If the loan balance exceeds the home’s value, heirs can typically walk away. Most reverse mortgages are non-recourse, meaning heirs are generally not personally responsible for any shortfall beyond the home’s value.
Are Reverse Mortgages Safe?
Reverse mortgages can be a safe financial tool when used correctly. Many programs are regulated and require counseling from a HUD-approved agency to help borrowers understand the terms and responsibilities.
It’s still smart to compare options and talk with a loan officer, financial advisor, or HUD-approved counselor to confirm whether a reverse mortgage fits your goals.
Where Can I Get More Information About Reverse Mortgages?
For more detailed information and a customized quote package, consider speaking with a local lender or contacting a HUD-approved counseling agency.
Our website also includes educational resources to help you feel confident as you explore your options.
Thanks For Reading Our Reverse Mortgage FAQs
Reverse mortgages can offer a way for older homeowners to access home equity and improve cash flow. By understanding how they work, the costs involved, and the potential impact on your estate, you can better determine whether a reverse mortgage is right for your situation.
If you have questions or would like a customized quote package, don’t hesitate to reach out to a local reverse mortgage lender near you.