Reverse Mortgage
A reverse mortgage lets older homeowners convert part of their home equity into cash without a monthly mortgage payment. The balance grows over time and is generally repaid when the home is sold or the last borrower leaves it permanently.
The obligations that remain are the part people most often miss. Property taxes, homeowners insurance and maintenance stay the borrower's responsibility, and falling behind on them can trigger default.
Availability
Hire Best Pros is not connecting people with reverse mortgage professionals yet. This page is here as background reading while we work on it. Everything we do cover today is listed in our service directory.
What people usually need
- Supplementing retirement income
- Paying off an existing mortgage payment obligation
- Covering in-home care costs
- Creating a standby line of credit in retirement
- Aging in place with modifications to the home
What to weigh before hiring
Counseling is generally required
Federally insured reverse mortgages require independent counseling before application, which is worth treating as useful rather than a formality.
Effect on heirs
The loan is typically repaid from the sale of the home, which reduces what passes to heirs. Discuss it with family beforehand.
Costs are front-loaded
Origination, insurance and servicing costs can be substantial, which makes short-term use expensive.
Common questions
- Can I lose the home?
- Yes, if property taxes, insurance or required maintenance obligations are not kept up, or if the home stops being the primary residence.
- Is the money taxable?
- Reverse mortgage proceeds are generally treated as loan proceeds rather than income, but the effect on benefits programs should be checked individually.