Reverse Mortgage

A reverse mortgage allows homeowners 62 and older to convert a portion of their home equity into loan proceeds — as a lump sum, monthly payments, or a line of credit — without making monthly mortgage payments. The loan balance grows over time and becomes due when the borrower sells, moves out permanently, or dies. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM).

The loan balance grows over time as interest accrues, reducing the equity available to heirs. You must continue to pay property taxes, homeowner's insurance, and maintain the home — failure to do so can trigger default and foreclosure. Fees and closing costs are significant. If you move out for more than 12 consecutive months (including for long-term care), the loan becomes due.

Yes. For HECM reverse mortgages, independent HUD-approved counseling is required before the loan can be processed. This counseling covers alternatives to a reverse mortgage, loan terms, and long-term implications for you and your heirs. The session is required — not optional — and must be completed with an approved counselor, not a lender representative.

A reverse mortgage may be appropriate for seniors who have significant home equity and limited liquid retirement income, plan to remain in their home long-term, and have no plans to leave the home to heirs. It is not appropriate for those who may need to move for health care within a few years. Consult a fee-only financial advisor before deciding.