Draw only what you need, when you need it. Interest accrues only on what you have drawn, and the unused portion grows over time. Usually the most efficient option.
Most flexibleA way for homeowners aged 62 and over to convert equity into cash without a monthly mortgage payment. It suits some situations very well and others poorly, so this page covers both.
You keep the title and there is no monthly mortgage payment. Three things remain your responsibility, and failing them can put the home at risk.
You continue paying them. They do not roll into the loan.
Coverage has to stay current for the life of the loan.
The home must be kept in reasonable repair and remain your primary residence.
Why this matters. Falling behind on taxes, insurance or upkeep is the most common reason a reverse mortgage ends badly. It is a genuine risk, not fine print, and worth being honest with yourself about before starting.
Requirements
Worth knowing
Counselling is required, not optional. Before a HECM application can proceed you must speak with an independent HUD-approved counsellor who does not work for any lender. That session exists to protect you, and it is worth taking seriously rather than treating as paperwork.
The choice materially changes how much interest accrues, so it is worth more thought than it usually gets.
Draw only what you need, when you need it. Interest accrues only on what you have drawn, and the unused portion grows over time. Usually the most efficient option.
Most flexibleA fixed sum each month, either for a set term or for as long as you live in the home. Predictable, and useful as a supplement to retirement income.
Most predictableEverything at once, at a fixed rate. Interest starts accruing on the whole balance immediately, so this is the most expensive route unless you genuinely need the full amount.
Most costlyA smaller draw now with the rest as a line of credit or monthly payments. In practice this is what most borrowers should be comparing against.
Often the answerOften a good fit
Usually a poor fit
Reverse mortgages carry higher upfront costs than a standard loan. Most can be financed into the balance, which is convenient but means you pay interest on them.
Figures are typical for an FHA-insured HECM and are illustrative. Your actual costs depend on the property value, the programme and the lender. We will put real numbers in front of you before you commit to anything.
The loan becomes due when the last borrower sells, moves out permanently, or passes away. Heirs then choose: repay the balance and keep the home, or sell it and keep whatever equity remains.
A HECM is non-recourse. If the balance ends up higher than the home is worth, neither you nor your heirs owe the difference — the insurance covers it. That protection is much of what the mortgage insurance premium buys.
You will not have to repay it as long as you live in the home as your primary residence, maintain it, and keep taxes and insurance current. There is no term you can outlive.
Yes. Your heirs can repay the balance and keep the home, or sell it and keep any remaining equity. They typically have around six months, with extensions available, to decide.
No. Neither is needs-based, so a reverse mortgage does not affect them. It can affect needs-based programmes such as Medicaid or SSI, particularly if funds sit in your account across a month end. Worth a conversation with a benefits adviser first.
Yes. The title stays in your name. The lender holds a lien, exactly as with a traditional mortgage.
They may be able to be listed as an eligible non-borrowing spouse, which allows them to remain in the home after the borrower dies. The rules are specific and getting them right at application matters enormously.
Often yes. The reverse mortgage pays off the existing loan first, which is the point for many borrowers — it removes a monthly payment. You need enough equity for the numbers to work.
A reverse mortgage is not reversible in any practical sense, so it deserves an unhurried conversation and an independent counsellor. Happy to be the first of those.