No, with a reverse mortgage you still own your home and are still responsible for taxes and insurance.
When you take out a reverse mortgage, you're using some of your home's equity in exchange for cash or a line of credit. Over time, the loan balance grows because you're not making monthly payments, but your remaining equity can still increase if your home continues to appreciate. When the loan becomes due, any remaining equity after the loan is paid off belongs to you or your heirs.
No, reverse mortgages are non-recourse loans, which means your heirs will never owe more than the home's value at the time of sale. If they wish to keep the home, they can pay off the loan by repaying the balance or 95% of the home's current market value - whichever is less. If the home is sold, any remaining equity goes to your estate.
Yes, if you have enough equity you can still qualify for a reverse mortgage. Some of the proceeds from the reverse mortgage will be used to pay off the existing mortgage.
Absolutely not. As long as you live in the home as your primary residence, maintain it, and stay current on property taxes, homeowners insurance, and any HOA dues, you cannot be evicted - even if you live to be 150 years old. There is no loan term or expiration date that would force you to leave your home.
You do not need a high credit score to qualify. Reverse mortgage lenders focus more on your ability to meet ongoing property obligations (like taxes and insurance) rather than your credit score. They will check for any serious issues with federal debt or late payments on housing-related expenses. If needed, a LESA (Life Expectancy Set Aside) may be used to help cover future property costs.
While reverse mortgages can have higher upfront costs than traditional loans - especially FHA-insured loans - most of these costs are rolled into the loan. You pay nothing out of pocket in most cases. Over time, the value of accessing your home's equity without monthly payments can far outweigh the cost, especially if you live a long life or the property value declines. You still own the home, and any remaining equity after the loan is paid off belongs to you or your heirs.
A reverse mortgage is not due and payable until the last surviving borrower dies, sells the home, or does not live there for 12 consecutive months, providing the taxes and insurance are paid and the property is maintained. So as long as one owner lives in the home, the loan will not be affected and continue to provide cash flow.
There is no one demographic. Seniors choose reverse mortgages for many reasons including immediate needs, such as paying off their existing mortgage or other debts. Others use the money for home improvements, medical expenses or to buy or downsize to a new home without a mortgage payment (called a HECM for Purchase) or as part of a retirement plan. A Reverse Mortgage can also help with long term care.
Not necessarily. If you sell your home, it may cost you up to 10% of your home's equity in sales costs alone. After selling, you may have to pay rent or have another monthly payment that eats away at your savings. Also, moving for many seniors is an overwhelming task.
No. While most reverse mortgages are similar, not all lenders are the same. You want to work with a lender who thoroughly understand these types of loans and can go over every option available to you. A good lender will present the facts and let you make the decision, without added pressure.
Your home doesn't need to be perfect, but it must meet basic safety and livability standards. Any repairs that are considered health or safety concerns must be completed before the loan can close. In certain cases, non-critical repairs may be allowed through a repair set-aside, where funds are reserved from the loan to complete repairs after closing. Each situation is reviewed individually.
