Reverse Mortgage FAQ

Obtaining a reverse mortgage loan is a big decision. It’s normal for you and your family to have questions and hopefully the answers below can help put your mind at ease. If you don’t see your question, feel free to call me. When you’re ready to apply, I’ll work with you through every step of the process.

Question and Answers about Reverse Mortgage Loans


What is a Reverse Mortgage?

A reverse mortgage, or HECM,  is a loan that allows you to access a portion of your home equity and convert it into tax-free retirement funds. With this type of loan, you maintain the title to your home. The loan typically becomes due when the last borrower(s) permanently leave the home. Provided the home is sold to repay the loan, the borrower will never owe more than the appraised value of the home.

What Does HECM Stand For?

HECM stands for Home Equity Conversion Mortgage, and is the only type of reverse mortgage insured by the Federal Housing Administration.

Who is Eligible for a Reverse Mortgage?

Homeowners at least 62 years of age with moderate to significant equity in their homes who want to eliminate existing mortgage payments or receive additional cash.

Will I still own my home or will I lose it?

You will still own your home and you can stay in it for as long as you wish, provided you pay your taxes, insurance and maintain the home according to FHA requirements.

How much of my home’s equity can I access with a reverse mortgage loan?

The loan amounts vary based on a number of factors including which reverse mortgage loan product you choose. The amount you can receive depends on the age of the youngest borrower, current interest rates, and the lesser of the appraised value of your home, the sale price or FHA maximum lending limit.

How can I use the money?

After paying off any existing mortgage, the money you receive from your reverse mortgage loan can be used any way you choose such as paying for medical expenses (including in-home care), home improvement, travel, and living your retirement dreams. There are no limitations or restrictions, once you receive the net proceeds.

How will I receive the available funds?

The most common way is to draw from a line of credit to use at your discretion. However, you may also choose to receive a single lump sum, regular monthly installments, or any combination of these options.

Do Both Spouses Need to be 62?

No. Only one borrower needs to be 62, but loan proceeds are based on the younger homeowner’s age.

Will I have to pay any taxes?

No, the money you receive is not considered income, and therefore it is tax-free (talk to your tax advisor)

I Still Have a Mortgage. Can I Take Out a Reverse Mortgage?

Absolutely—the existing mortgage is paid at closing, and then you receive any remaining cash. You no longer have monthly mortgage payments, although as the homeowner you’re responsible for insurance, property taxes, and maintaining the property.

Is my home eligible?

Your home must be a single-family residence in a 1- to 4-unit dwelling, or a FHA-approved condominium.

Do Some Homes Not Qualify for a Reverse Mortgage?

Vacation homes, secondary residences, and rental properties of more than four units do not qualify for a reverse mortgage. To refinance such properties contact me directly.

Are there property and insurance requirements?

Since you still own your home with a reverse mortgage loan you’re responsible for the general maintenance and upkeep as well as for paying all ongoing property taxes and insurance. You can often pay for these expenses with funds from your reverse mortgage loan.

What costs are involved with a reverse mortgage loan?

As with any loan, there are closing and other costs. However, most fees can be financed as part of the loan. The HUD counseling fee and appraisal are  the only out-of-pocket costs.

If no monthly payments are required, how is my reverse mortgage loan paid back?

To pay off the loan balance, you or your heirs can sell the home or you can pay the loan balance and keep the home.

Will my family or estate ever owe more than the value of my home?

No. An FHA-insured reverse mortgage is a non-recourse loan, meaning the original owner never owes more than the home is worth.

When does the Loan Come Due?

The loan is due and payable when the last remaining borrower sells the property, permanently leaves the home, or passes away.

What if I want to leave our home to the kids?

You can still leave it to your children, or to anyone you choose. When the loan becomes due, you or your heirs have the option of paying off the full balance of the loan and keeping the home.

Will I incur any penalties if I decide to pay back the loan early?

No. You can pay back the loan at any time without the worry of being penalized.

Will this loan affect my Social Security or Medicare benefits?

HECM reverse mortgage loan payments typically do not affect your Social Security or Medicare benefits. However, regulations vary for the Federal Supplemental Security Income program and for state-administered programs such as Medicaid, Aid for Dependent Children (AFDC), and food stamps. We suggest that you consult a benefits specialist at your local Area Agency on Aging or the local offices for these programs to determine how HECM payments may affect your particular situation.

If my parents have a reverse mortgage, what should I do in the event of their passing?

You should first contact the loan servicer to notify them that the borrower(s) have passed away. You can typically find the servicer’s contact information on the monthly statement. Once the loan servicer has been notified, they will help you (the heirs) with next steps.