Reverse mortgage education for homeowners 62+
Understand Your Reverse Mortgage Options Before You Decide
A reverse mortgage lets eligible homeowners convert part of their home equity into loan proceeds while continuing to live in their home. As a broker, we compare options from multiple lenders. As a consultant, we make sure you understand the costs, the responsibilities and the alternatives.
How a Reverse Mortgage Works
With the most common type, the FHA-insured Home Equity Conversion Mortgage (HECM), you borrow against your home's value. No monthly mortgage payment is required on the reverse mortgage as long as you meet the loan obligations below. Any existing mortgage must be paid off with the proceeds, which is how some homeowners are able to eliminate a monthly mortgage payment.
Depending on the program, proceeds can be taken as a lump sum, scheduled monthly payments, a line of credit, or a combination. Proceeds are generally not treated as taxable income, but you should confirm how they may affect Social Security, Medicare, Medicaid or other benefits with a qualified advisor.
Who May Qualify
- Every borrower on title is generally 62 or older (the age rule varies by program).
- The home is your primary residence and meets property standards.
- You have sufficient equity, and you can keep paying property taxes, homeowners insurance and upkeep.
- You complete counseling with a HUD-approved counseling agency before applying (required for HECM loans).
What You Need to Know Before Deciding
- It is a loan. Interest and fees are added to the balance, so the amount you owe grows over time and your home equity decreases.
- You keep your home and your responsibilities. You must pay property taxes, homeowners insurance, any HOA dues, and maintain the home. Failing to do so can make the loan due, and you could lose your home.
- Costs. These include an upfront and annual FHA mortgage insurance premium, origination and closing costs, servicing fees and interest.
- When the loan becomes due. Typically when the last borrower no longer lives in the home as a primary residence, sells it, or fails to meet loan obligations. You or your heirs can repay the loan, sell the home, or turn it over to the lender. Under the HECM program the amount owed is generally limited to the value of the home.
- Spouses. A spouse who is not on the loan may have limited protections. Discuss this carefully before applying.
- It is not right for everyone. Depending on your goals, alternatives such as downsizing, a refinance, a home equity loan, or doing nothing may serve you better. We will walk through them with you.
Our Approach: Education First
We do not start with a product. We start with your goals: monthly cash flow, preserving savings and investments, staying in your home or moving, and what you want to leave to your family. Then we show you how different options compare, including options that are not reverse mortgages.
Common Questions
Will I still own my home?
Yes. You keep title to the home and remain responsible for taxes, insurance and maintenance.
Do I have to make monthly mortgage payments?
No monthly mortgage payment is required on a reverse mortgage while you meet the loan obligations. You may choose to make payments. Your balance grows if you do not.
Can I still leave my home to my family?
Yes, but your heirs will need to repay the loan balance, typically by selling the home or refinancing, in order to keep it. Any equity remaining after the loan is repaid belongs to you or your heirs.
Is counseling really required?
For HECM loans, yes. Independent HUD-approved counseling is required before you apply. It is there to protect you, and we will help you find a counselor.
Does a reverse mortgage affect my Social Security or Medicare?
Loan proceeds are generally not treated as income for Social Security or Medicare, but they can affect needs-based benefits such as Medi-Cal/Medicaid or SSI. Speak with a benefits advisor.
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Important: We are not affiliated with or endorsed by HUD, FHA or any government agency. This page is educational and is not an offer or commitment to lend. Loans are subject to credit and property approval, program eligibility and counseling requirements. Terms, fees and availability vary by lender. See Licensing & Disclosures.