Reverse Mortgage Solutions FAQs

Answered by a Certified Reverse Mortgage Professional

What is a reverse mortgage?

A reverse mortgage is a type of loan for homeowners age 62 and older to convert their home equity into cash income with no monthly mortgage payments. The loan is called “reverse” because unlike making monthly payments to a lender, the lender makes the payments to the borrower. Reverse mortgages help retirees with limited income use the accumulated wealth of their homes to cover basic living costs.

Check out this video for more information.

Does the bank own my home?

No. Reverse mortgage borrowers retain ownership of their homes. You are not relinquishing title or ownership when using reverse mortgage lenders, but borrowing against the value of their home. A borrower may not lose their home under normal circumstances as long as they comply with loan terms.

What are the different ways I can receive my home equity conversion mortgage/reverse mortgage funds?

Funds for a home equity conversion mortgage/reverse mortgage can be disbursed in several ways: full or partial lump sum, as a line of credit, through monthly payments, or a combination of any of these.

What if the reverse mortgage loan amount ends up more than the value of the home? Who will be responsible for the loan?

Reverse mortgage loans for seniors are non-recourse loans. What this means is that if somehow that home equity conversion mortgage loan balance ends up surpassing the value of the home, reverse mortgage lenders cannot collect more than the value of the home. Under the Home Equity Conversion Mortgage program, the difference between the HECM loan balance and the home value is covered by the Federal Housing Administration (FHA) insurance fund.

Will a reverse mortgage affect my Social Security, Medicare, or pension benefits?

No, these benefits will not be impacted. Reverse mortgage/home equity conversion mortgage funds for seniors are considered loan proceeds and not income. However, Medicaid and other income-based benefits may possibly be affected. What’s more, the longer you wait to access Social Security benefits, the more you may receive. A reverse mortgage for seniors can help delay assessing Social Security in order to boost your lifetime retirement income.

How does a home equity conversion mortgage/reverse mortgage work?

With continuous living in your home, you will be able to retain ownership and not be required to make any monthly mortgage payments during the loan period. Instead of repaying the loan monthly, the loan balance is repaid when all borrowers have left the home. You will be required to pay for property taxes, home insurance, and home maintenance.

How can I qualify for a reverse mortgage loan?

  • The borrower on title must be 62 years or older (a non-borrowing spouse may be under age 62)
  • The home must be the borrower’s primary residence
  • The borrower must own the home (the borrower must meet the financial requirements of the Home Equity Conversion Mortgage program)

What are some common uses of a reverse mortgage?

  • Pay off an existing mortgage and eliminate monthly mortgage payments
  • Make retirement savings last longer
  • Use a “standby” Home Equity Conversion Mortgage growing line of credit to preserve investment accounts during market downturns or build a safety net for unplanned emergencies, home repairs, and healthcare expenses
  • Supplement your retirement income with monthly payments
  • Use a Home Equity Conversion Mortgage for Purchase Loan to buy a home that better fits your needs
  • Support aging in place expenses, like caregiving and home modifications

Can I buy a home with a reverse mortgage?

A HECM for Purchase Loan combines a reverse mortgage with the equity from the sale of your previous home – or from other savings and assets – to buy your next primary home in a single transaction. Regardless of how long you live in the home or what happens to your home’s value, you only make one down payment towards the purchase.