Frequently Asked Questions
The Top 10 Questions Homeowners Ask About Reverse Mortgages
1. Do I lose my home or does the bank own it?
No. You remain the owner of your home and retain the title. The bank simply places a lien on the property, just like a traditional mortgage. As long as you pay your property taxes, homeowner's insurance, and maintain the home, you cannot be forced to leave.
2. Do I have to make monthly payments?
No. One of the primary benefits is that monthly mortgage payments are optional. You can choose to make payments to reduce the balance, but you are not required to do so as long as you meet the loan obligations (taxes, insurance, maintenance).
3. What happens to the loan when I pass away?
Your heirs generally have three choices:
1) Keep the home: Pay off the loan balance (or 95% of the current appraised value, whichever is less).
2) Sell the home: Sell the property, pay off the loan, and keep 100% of the remaining equity.
3) Walk away: If the home is worth less than the loan, they can deed it back to the lender with no personal liability.
4. What if I owe more than the house is worth?
Most reverse mortgages (including HECM) are non-recourse loans. This means that neither you nor your heirs will ever owe more than the value of the home at the time it is sold. FHA insurance covers the difference if the loan balance exceeds the property value.
5. How much money can I get?
The amount depends on the age of the youngest borrower, the current interest rate, and the lesser of the home’s appraised value or the FHA lending limit (approx. $1.15M). For homes worth more than that, our Proprietary Jumbo products can lend up to $4 million.
6. Is the money I receive taxable?
Generally, no. The IRS considers reverse mortgage proceeds as loan advances, not income. Therefore, they are typically tax-free. However, we always recommend consulting with your tax advisor.
7. Will this affect my Social Security or Medicare?
Reverse mortgage proceeds generally do not affect Social Security or Medicare benefits. However, because they increase your liquid assets, they could affect needs-based programs like Medicaid or SSI. Consult a benefits professional.
8. Can I sell my home later if I want to move?
Yes. You are not locked in forever. If you decide to downsize or move to assisted living, you simply sell the home, pay off the accrued reverse mortgage balance, and keep any remaining equity.
9. Can I use a Reverse Mortgage to BUY a home?
Yes! The HECM for Purchase allows you to buy a new home that better fits your retirement needs (e.g., single story, closer to family) and finance it with a reverse mortgage in one transaction—resulting in no monthly mortgage payments on the new home.
10. What is the difference between HECM and Jumbo?
Government-backed, limits home value consideration to approx. $1.15M, requires Mortgage Insurance (MIP), but offers a Line of Credit that grows over time.
Private loan for high-value homes (up to $10M+), allows loan amounts up to $4M, typically has NO Mortgage Insurance costs, but usually offers a fixed rate lump sum only.