Reverse Mortgages

A reverse mortgage lets some older homeowners borrow money based on the value of their home.

It can help some people get extra cash in retirement. But it is not right for everyone. Before you decide, make sure you understand the costs, the risks, and what it could mean for your home and your family.

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What is a reverse mortgage?

A reverse mortgage is a loan for homeowners age 62 or older. It lets you borrow against the value of your home.

With a regular mortgage, you pay the lender every month. With a reverse mortgage, the lender pays you.

The loan usually does not have to be paid back until the last homeowner dies, sells the home, or moves out. Then the home is often sold, and the money from the sale is used to pay back the loan.

 

Who may qualify?

You may be able to get a reverse mortgage if you:

  • are 62 or older

  • live in the home as your main home

  • own a single-family home, a home with up to four units, an approved condo, or an approved manufactured home

  • own the home outright, or only have a small amount left on your mortgage

  • can show the home is in good condition before the loan starts

Before approval, the lender will look at whether you can still pay for:

  • property taxes

  • homeowner’s insurance

  • basic home upkeep

  • HOA fees, if your building or community has them

This session explains the pros and cons of a reverse mortgage and how it may affect your money, your benefits, and your future plans.

 

How can it help?

A reverse mortgage may help some older homeowners:

  • get extra money in retirement

  • use the value built up in their home

  • cover monthly expenses

  • help pay for health care or other needs

 

Important risks to understand

A reverse mortgage is not for everyone.

It may not be a good fit if you:

  • want to leave the home to your children or other heirs

  • live with someone who may not be protected by the loan

  • may move soon

  • have trouble paying taxes, insurance, or upkeep costs

Even with a reverse mortgage, you still have responsibilities. You must:

  • live in the home

  • keep the home in good condition

  • pay property taxes

  • keep homeowner’s insurance

  • pay required fees, such as HOA fees, if they apply

If you do not meet these rules, the lender may be able to foreclose.

The loan must also be paid back someday. After the last borrower dies, sells the home, or moves out, the reverse mortgage becomes due. In many cases, the home is sold to pay back the loan. This is why a reverse mortgage may not be the best choice if keeping the home in the family is very important to you.

 

Questions to ask before you decide

Before you take out a reverse mortgage, ask:

  • Do I plan to stay in this home for years?

  • Can I still afford taxes, insurance, and repairs?

  • Do I want my family to inherit this home?

  • Do I understand all the fees?

  • Have I looked at other ways to get help?

It is also smart to talk to more than one lender. Ask:

  • What fees will I pay?

  • What interest rate will I get?

  • Can the rate go up later?

  • How much money would I receive?

  • How fast will I owe more money over time?

A reverse mortgage is only one option. Depending on your situation, there may be other ways to get help with money, repairs, taxes, or housing costs.

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Watch a video about reverse mortgages
 
 

Get help

If you are thinking about a reverse mortgage, talk to someone before you decide.

A reverse mortgage can help some homeowners. But it can also put your home at risk if you cannot keep up with taxes, insurance, and upkeep.

Get advice and compare your options before you decide.

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